After the weak earnings report by JP Morgan, what is the fate of other major banks?
The world leading banking giants, Citigroup and Goldman Sachs are expected to report first quarter 2022 earnings reports on Thursday 14 April 2022 joining Bank of America & Wells Fargo which reported on the same day (our exclusive report here), while JP Morgan reported a day earlier on April 13th. With 5 major banks starting earnings reporting sessions for the first quarter of 2022, any shocks will have an impact on the US stock market as a whole.
Citigroup
After an unsatisfactory 4th quarter report, Citigroup has restructured its strategy for 2022. Chief Executive Officer (CEO) Jane Fraser has undertaken an aggressive strategic restructuring including closing 13 offices in Asia and downsizing operations in Mexico. They have also changed their business structure in the institutional market as well as security services.
Analysts expect Citigroup’s growth for Q1 2022 to be lower than the same quarter in 2021. High volatility in the FX and commodity markets, rising interest rates and the Russia-Ukraine crisis are expected to hurt Citi’s revenue for the quarter, with revenue projected at $18.2 billion compared to $19.3 billion in the previous year. Meanwhile, the earnings per share (EPS) rate is projected at $1.44 per share compared to $3.62 per share in the same quarter last year. (CNN Business)
The #Citigroup (MT5) stock has posted a nearly 40% decline from the $80.28 high recorded in 2021, and it is now trading slightly above $50 which is also an important area of the 61.8% Fibonacci retracement golden ratio from the 2020-2021 rise. The current price of this stock is well below MA-50 and MA-200, indicating a downtrend. #Citigroup is now also at the bottom of the bearish channel. Its next support is well below at $42 while the nearest resistance is at 50% fib at $55.96. The RSI-14 has passed the oversold level with the MACD also below 0.
Goldman Sachs
Like other banking companies, Goldman Sachs is also expected to face a challenging 2022. After a record year in 2021 in which Goldman Sachs reported the highest earnings and returns since the 2008 financial crisis, the 2022 first quarter report is expected to decline significantly compared to the same quarter of 2021. The EPS rate of return per share is expected to be reported at $8.90 per share, over 100% lower than the EPS in the same quarter last year at $18.60, while the earnings report is expected at $11.9 billion compared to $17.7 billion in the same quarter last year and lower than the $12.6 billion in the 4th quarter of 2020. The weak growth trend for investment banking and asset management is expected to have a strong impact on Goldman Sachs earnings. (CNN Business)
The #GoldmanSachs (MT5) stock is among the most expensive banking stocks on the New York Stock Exchange. It is currently trading at $319.13, down 25% from a 2021 high of $426. The stock is currently near the support level of the 38.2% retracement fibo at $314. The main trend remains below the MA-50 and MA-200 with death cross having occurred. The closest resistance is at the MA-50 at $349 followed by a 23.6% fib at $357, while the nearest support at 50% fib is $280 will be activated if the psychological level of $300 is broken. The RSI-14 is still above the oversold zone but the momentum is still down.
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Tunku Ishak Al-Irsyad
Market Analyst
HF Education Office Malaysia
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