Banking, it’s just like a rollercoaster ride! With Bank of America’s reported $7.5 billion earnings in Q3, it appears that their year is starting to pick up. The earnings per share has surpassed expectations and we’re all wondering, “what does that even mean?” Well, apparently it means that they made more money than people thought they would. Way to go, Bank of America!
But wait, there’s more! They have even more money in their pockets with their loan portfolio expanding. Who knew loaning money could be so lucrative? Oh, that’s right, banks did. They have a lot of loans that have risen 1% from 2019 to this year as well, so it looks like they’re trending up!
Wells Fargo, being the judgy little bank that it is, decided to give Bank of America a price target of $45, which is almost a 50% increase from its closing price on Wednesday. Wooo! Talk about a raise! But is this too good to be true?
Oh no! Here comes the plot twist! Wells Fargo gave Bank of America a “buy” rating, but wait, there’s more! Biggar of Argus Research, decided to throw Citigroup into the mix and said he prefers Bank of America more.
“I like BAC’s broad diversification, which helps smooth out periods of weakness in some business lines depending on the environment. The lending business is currently the driver, while investment banking has been weak. Trading has been a greater driver of revenues, as has their very large credit card business.” Biggar told CNBC.
Citigroup sneaked in there with a beat on their earnings per share by 13%. They have had an almost one-third growth year after year for their Treasury and Trade Solutions unit, which we assume is the place they put all of their treasure after they win at the trade shows they attend.
Wells Fargo seems to think that Citi could have a potential upside of 24% which is a lot smaller than Bank of America, but hey, it’s still an upside! Biggar told CNBC that “They lag peers on several financial metrics including return-on-equity and efficiency, but under the new CEO are making wholesale changes to improve financials, including closing down many far-flung international operations that were not strategic and often added volatility to the earnings stream.”
Overall, it’s starting to seem like the banks are using their monopoly money we give them to have a good time. But at least now we know how to get rich! Just become a bank and start loaning money! Easy as pie!
Serious News: cnbc
