The big banks just had a busy earnings week, with several beating expectations. Two of them, Citigroup and Bank of America, beat expectations on revenue and other metrics. Stephen Biggar, head of research for financial institutions, said: “Given the failure of SIVB, an increase in regulation is expected, but the large banks are well prepared and we don’t expect them to see major changes. Smaller banks are likely to bear the brunt of the additional shocks. Regulatory Review.” In Argus Research. Bank of America is still down less than 1 percent year-to-date and is down more than 8 percent since the banking crisis began, while Citigroup has recovered some of its losses and is up more than 4 percent, up 12 percent year-to-date. The table below shows some key metrics, including the capital position, profitability and nature of deposits of the two banks. CNBC Pro takes a look at what analysts are saying about the two largest U.S. banks. Bank of America: “Remarkable Resilience” Wells Fargo said in an April 18 report that Bank of America continued to showcase the theme that “Goliath is winning.” “Its 1Q23 earnings per share beat consensus estimates by 13% and its business model, balance sheet and funding are exceptionally resilient,” wrote Wells Fargo analysts led by Mike Mayo. The bank, according to Refinitiv data, Earnings per share were 94 cents, beating Wall Street expectations of 82 cents. Wells Fargo said bank deposits fell 2%. But it added that the bank has “deposit stickiness” and highlighted changes in its deposit levels, saying, “The big picture is that BAC has the lowest cycle-to-date beta (estimated at 30% ) interest-bearing deposits.” The issue of uninsured deposits has been in the spotlight since the collapse of Silicon Valley Bank, which exceeded the FDIC guarantee limit. Wells Fargo also noted that Bank of America’s capital markets revenue rose 1% year-over-year and 30% quarter-over-quarter, outperforming its peers. Wells Fargo has a price target on Bank of America of $45, or nearly 50% upside from Wednesday’s close. Argus Research’s Biggar said he prefers Bank of America to Citigroup, although he has a “buy” rating on both. “I like the broad diversification of BAC, which helps smooth out periods of weakness in certain lines of business, depending on the environment,” he told CNBC Pro. “The lending business is the driver right now, while investment banking has been soft. Trading has been a bigger driver of revenue, as has their very large credit card business.” Citi: “More of a turnaround story” Citi’s per Shares beat estimates by 13% on better-than-expected net interest income, fees and expenses, and a nearly one-third year-over-year increase in its treasury and trading business. Bank analysts wrote. The segment, a unit of Citi’s Institutional Clients Group, provides cash management and trade finance services. “At the start of earnings, we sensed differentiators coming from banks like Citi, which showed higher (average) deposits (slightly above QoQ) and (net interest income) (+1%), including ( net interest margin) NIM (up 2 basis points),” the analyst said. Wells Fargo has a $62 price target on Citi, or potential upside of 24% from Wednesday’s close — lower than its price target on Bank of America. Citi is “more of a turnaround story,” Biggar said. “They lag behind their peers on several financial metrics, including (return on equity) and efficiency, but under the leadership of the new CEO, large-scale changes are being made to improve the financial position, including closing many non-strategic and often increasing volatile broad international revenue streams,” he told CNBC Pro.
