In This Article:
Bank of America (BAC) and Citigroup (C) posted stronger-than-expected first quarter results, driven by solid trading revenues and resilient core trends.
HSBC head of US financials research Saul Martinez joins Morning Brief to discuss why these earnings reinforce a bullish outlook for both banks and what the results signal for the broader financial sector.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
Talk to me about your reaction to these results this morning and how you're viewing the entire financial sector off the back of these big bank earnings.
Yeah, and thank you for having me. I think in in the case of Bank of America and City Group, um, they're both very encouraging results. These are both stocks that we are recommending. And I I think what, um, in both cases and and we're seeing is a reiteration of the financial outlooks that we were expecting. So in the case of Bank of America, for example, a big part of the bull case is that the net interest income outlook is very encouraging and that you would see growth throughout the course of the year. And the guidance is for that growth to that net interest income uh, figure to reach 15.5 to 15.7 billion uh, by the fourth quarter. That's a pretty big increases versus current levels. And they reiterated that guidance, and not only did they reiterate that guidance, they had very good core trends in a lot of in a lot of realms. Deposit costs came out came down. They're actually seeing better than peer loan growth. Uh, they're seeing good deposit trends. So the underlying, um, you know, trends that sort of uh, reinforce the the investment thesis for Bank of America, I think were really reiterated by the results. In the in City Group's case, we haven't, you know, their call will be at 11. I think, you know, similarly, they reiterated the full year guidance for revenues and costs. And a lot of the core trends were actually very good. This was a subdued quarter for investment banking, for example, for a lot of companies. Actually, City Group outperformed on investment banking. They're seeing good momentum in wealth management. Um, net interest income is growing. Um, the expense number was good. So, you know, first blush, I think a lot of the underlying trends are encouraging, and I think the other thing I would just mention here is that coming into the quarter for all of the financials, we really focused on what the message from management was going to be. Was the tone going to be confident or were, you know, concerns going to be expressed? And broadly speaking, the message has really been that the sky is not falling. You know, there have been some nuances here, Jamie, uh, you know, maybe a little bit more, uh, you know, in the realm of highlighting downside risks, but but generally a pretty nuanced view where they're indicating corporates are delaying decisions, but, you know, there there's optimism about policy clarity later this year, the regulatory agenda, you know, tax cuts being extension extended, and folks are still spending in early April. So, you know, the sky is not falling has been the message, and I think that's been well received.