Bank of America and Citigroup posted two of the three biggest declines in the Standard & Poor’s 500 Index Thursday, after results fell short of those at rivals as managers had to focus on cutting costs.
Bloomberg reports that Bank of America fell 4.2% to $11.28 at 4:15 p.m. in New York after fourth-quarter net income slumped 63% to $732m. Citigroup dropped 2.9% after profit of $1.2bn missed estimates as litigation costs rose. JPMorgan Chase and Co., the largest U.S. bank, and Wells Fargo each announced quarterly profit this month of more than $5bn.
Brian T. Moynihan, the CEO at Bank of America, is grappling with costs from mortgages originated before he took over three years ago. Michael Corbat, who became Citigroup CEO in October, is incurring expenses to resolve litigation and pulling back from some emerging markets. Each CEO is cutting jobs.
'Both organizations are, for lack of a better word, somewhat lost', said Joshua Siegel, founder of StoneCastle Partners, a New York-based firm $5.1bn in assets under management that invests in banks. The firms 'have been spending a significant amount of time dealing with the problems of the past rather than aggressively marketing the organizations'.
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