Citi soars by 10% and stimulates the banking sector: more income on rates
The good results of Citigroup raised the expectations of the market, and above all of the banking sector. In fact, the KBW Bank banking index soared by 4%, surpassing even the profit reflected today by the S&P 500, and then reduced the growth to 2.5%.
And it is that during 2022, this index was hit, with a 24% drop, and the results of JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) on Thursday momentarily depressed the sector and the market, which closed red that day.
Changing the landscape
However, Citi's results changed the picture: the Bank reflected that due to the increase in rates, it received more interest income, which increased by 9% to $ 11.960 million, which is more than expected. And total revenue grew by 11% more than expected.
While Citigroup's profit declined, the pullback was 27%, which is better than expected and lower than other banks. Although earnings per share S1. 68 was calculated, it was $2,19.
And although Wells Fargo (NYSE:WFC) reflected a 48% decline in second-quarter earnings, similar to JPMorgan's growth, the stock also jumped to almost 8%, as investors began to positively assess the growth, which also affected interest income by 16%.
The main Wall Street indexes are also benefiting from a significant increase in retail sales - after falling in May-and an improved outlook for rate hikes. While the futures markets yesterday reflected an 84% probability that rates rose by 100 pp. n., this probability decreased to less than 10%.
On Friday, the Dow Jones index rose 575 points, or 1.88%, while the S&P 500 index rose 1.64%, or 62 points, and the Nasdaq index rose 1.40%, or 157 points.