Bank of America Corp (BAC), Citigroup Inc (C), Goldman Sachs Group, Inc. (GS): What You Can Learn From Three Banks’ Earnings

Final Comment

Bank of America Corp (NYSE:BAC) is still trying to clean its balance sheet. Brian Moynihan, the bank’s CEO, has done an excellent job so far, but most analysts believed this was not enough for this quarter. If this strategy continues to show improvements, the company could enjoy very good upside and future growth. It’s also implementing the “New BAC initiative,” which is expected to cut expenses around $8 billion on an annual basis.

Citigroup Inc (NYSE:C) has made efforts to increase its revenue this quarter. It will still have to look at its balance sheet’s credit quality, which could inflict pain by assigning more provisions for loan loss reserves. On the other hand, it will have to maintain the current net interest margin (the difference between what a firm pays in deposits, and what it charges for loans) at  roughly 2.9%. This will be a difficult task, as low interest rates, the legacy costs of its Citi Holdings segment, and new regulations demanding greater capital reserves could further exert pressure on the company’s earnings.

Goldman Sachs Group, Inc. (NYSE:GS) seemed to have a stable quarter. Its revenues were flat compared to the first quarter of 2012, and it was helped by an excellent quarter’s worth of underwriting. However, it will have to try and fix the decline in its institutional client segment, a very important part of its revenue mix, and reduce operating expenses that could impact future growth prospects. If Goldman doesn’t improve on these fronts in the next quarter, it may suffer a decline in total revenue.

The article What You Can Learn From 3 Banks’ Earnings originally appeared on Fool.com and is written by Damian Illia.

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