Both, Citigroup and Bank of America, had rough quarters, but for very different reasons. Bobbi Rebell reports.
Citigroup and Bank of America took hits on profits, but for very different reasons. Citigroup's fell on legal and restructuring charges. Bank of America profits down 14 percent hurt by lower fixed income trading revenue. For Citigroup, the most recent legal problems are tied to government probes into alleged currency market and libor interest rate manipulation, as well as lax compliance with money laundering woes. The bank has been cutting costs, but those savings have been going to tighten risk controls and to meet stricter capital standards. Shares fell on the news. Shares of Bank of America also were under pressure. The second largest U.S. bank by assets said bond trading revenue fell 21 percent. Overall fixed income trading has been falling since 2009, largely because of new rules meant to keep risks in check. Rival JP Morgan Chase had reported a 14 percent drop in bond trading revenue just a day earlier. On the bright side, their legal costs have been falling. Guggenheim Securities' Eric Wasserstrom writing "Our key conclusion from the results is that, while the continued decline in operating and credit costs supports our view of BAC as benefiting from continued restructuring, the weaker top line indicates downside risk to our current 2015 EPS forecast of $1.50." ...suggesting the worst of the damage linked to home loans and other issues in the aftermath of the financial crisis, may be behind it.