Tag Archives: Coronavirus: Business

Business

Citigroup (C) 2Q 2022 earnings beats

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Jane Fraser, CEO of Citi, says she is convinced Europe will fall into recession as it faces the impact of the war in Ukraine and the resultant energy crisis.

Patrick T. Fallon | AFP | Getty Images

Citigroup on Friday posted second-quarter results that beat analysts’ expectations for profit and revenue as the firm benefited from rising interest rates and strong trading results.

Here’s what the bank reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $2.19 vs $1.68 expected
  • Revenue: $19.64 billion vs $18.22 billion expected

Shares of the bank rose 8% in early New York trading.

Profit declined 27% to $4.55 billion, or $2.19 per share, from $6.19 billion, or $2.85, a year earlier, the New York-based bank said in a statement, as the bank set aside funds for anticipated loan losses. But earnings handily exceeded expectations for the quarter as analysts have been slashing estimates for the industry in recent weeks.

Revenue rose a bigger-than-expected 11% in the quarter to $19.64 billion, more than $1 billion over estimates, as the bank reaped more interest income and saw strong results in its trading division and institutional services business. Net interest income jumped 9% to $11.96 billion, topping the $11.21 billion estimate of analysts surveyed by Street Account.

Of the four major banks to report second-quarter results this week, only Citigroup topped expectations for revenue.

“In a challenging macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our liquidity, credit quality and reserve levels,” Citigroup CEO Jane Fraser said in the release.

Corporate cash management, Wall Street trading and consumer credit cards performed well in the quarter, she noted.

The firm’s institutional clients group posted a 20% jump in revenue to $11.4 billion, roughly $1.1 billion more than analysts had expected, driven by strong trading results and growth in the bank’s corporate cash management business. Treasury and trade solutions generated a 33% increase in revenue to $3 billion.

Fixed income trading revenue surged 31% to $4.1 billion, edging out the $4.06 billion estimate, thanks to strong activity on rates, currencies and commodities desks, Citigroup said. Equities trading revenue rose 8% to $1.2 billion, just under the $1.31 billion estimate.

Similar to peers, investment banking revenue dropped a steep 46% to $805 million, missing the $922.8 million estimate.

Bank stocks have been hammered this year over concerns that the U.S. is facing a recession, which would lead to a surge in loan losses. Like the rest of the industry, Citigroup is also contending with a sharp decline in investment banking revenue, offset by the boost to trading results in the quarter.

Despite Friday’s stock gain, Citigroup remains the cheapest of the six biggest U.S. banks from a valuation perspective. The stock was down 27% in 2022, as of Thursday’s close, when its shares hit a 52-week low.

To help turn around the firm, Fraser has announced plans to exit retail banking markets outside the U.S. and set medium-term return targets in March.

Earlier Friday, Wells Fargo posted mixed results as the bank set aside funds for bad loans and was stung by declines in its equity holdings.

On Thursday, bigger rival JPMorgan Chase posted results that missed expectations as it built reserves for bad loans, and Morgan Stanley disappointed on a worse-than-expected slowdown in investment banking fees.

Bank of America and Goldman Sachs are scheduled to report results on Monday.

This story is developing. Please check back for updates.

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Business

JPM earnings 4Q 2021

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JP Morgan CEO Jamie Dimon listens as he is introduced at the Boston College Chief Executives Club luncheon in Boston, Massachusetts, U.S., November 23, 2021.

Brian Snyder | Reuters

JPMorgan Chase reported fourth-quarter earnings before the opening bell Friday.

Here are the numbers:

  • Earnings: $3.33 a share, vs. estimate $3.01, according to Refinitiv.
  • Revenue: $30.35 billion, vs. estimate $29.9 billion.

JPMorgan Chase, the first major bank to report fourth-quarter earnings, will be closely watched for signs of an expected rebound in lending.

Government stimulus programs during the pandemic left consumers and businesses flush, resulting in stagnant loan growth and prompting CEO Jamie Dimon to say last year that loan growth was “challenged.”

But analysts have pointed to a rebound in the fourth quarter, driven by demand from corporations and credit card borrowers. They’ll want to see that show up in JPMorgan’s results, as that, along with the Federal Reserve’s expected rate hikes, are two primary drivers of the industry’s profitability.

Analysts may also ask the bank about the impact of its recent decision to rein in overdraft fees. JPMorgan said last month that it would give customers a grace period to avoid the punitive fees, a move that along with other changes will have a “not insignificant” hit to revenue.

JPMorgan chief operating officer Daniel Pinto said last month during a conference that fourth-quarter trading revenue was headed for a 10% drop, driven by a decline in fixed income activity from record levels. Offsetting that is an expected 35% jump in investment banking fees, he said.

The bank was forced to pay $200 million in fines last month to settle charges that its Wall Street division allowed workers to use messaging apps to circumvent record keeping laws.  

Shares of JPMorgan have climbed 6.2% this year, lagging the 11.6% rise of the KBW Bank Index.  

This story is developing. Please check back for updates.

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Business

Alaska Airlines is considering Covid vaccine mandates for staff

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Alaska Airlines Boeing 737 taking off from LAX.

PG | Getty Images

Alaska Airlines told staff on Wednesday that it is considering making Covid-19 vaccines mandatory for employees, according to company memo, which was seen by CNBC.

The policy change would make the Seattle-based carrier the latest airline to require vaccines for its employees. On Friday, United Airlines became the first major U.S. carrier to mandate vaccines for its staff. Frontier Airlines and Hawaiian Airlines have since issued similar requirements

Alaska, which has roughly 20,000 employees, said if it does mandate vaccines it would do so after the Food and Drug Administration gives full approval to one of the vaccines that are currently available under emergency approval.

Airline executives have recently raised concerns about the fast-spreading delta variant of Covid. Southwest Airlines earlier on Wednesday lowered its revenue and profit outlook, blaming the variant’s spread on weaker bookings and increased cancellations.

Delta, Southwest and American have encouraged but not mandated that employees are vaccinated.

“As an employer with a duty to keep you safe and given the contagiousness and health risks of the COVID-19 virus and its variants, we are within our rights to make this decision and to ask you for information about your vaccine status,” Alaska told employees. It said that there would be exceptions for religious or medical reasons, similar to other companies’ policies.”

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Business

BAC earnings 2Q 2021

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Brian Moynihan, CEO, Bank of America

Scott Mlyn | CNBC

Bank of America shares dropped after posting second-quarter revenue below analysts’ expectations.

Here’s how the bank did:

Earnings: $1.03 a share, including a one-time $2 billion tax benefit. It wasn’t immediately clear how that figure is comparable to the 77 cents estimate of analysts surveyed by Refinitiv.

Revenue: $21.6 billion, just under the $21.8 billion estimate.

Bank of America said that revenue declined from a year earlier because of a 6% drop in net interest income due to lower interest rates. Lower trading revenue and the absence of a $704 million gain a year earlier also hit revenue, the bank said.  

Shares dropped 2.3% in premarket trading.

Like other lenders, Bank of America set aside billions of dollars for credit losses last year, when the industry anticipated a wave of defaults tied to the coronavirus pandemic. Instead, government stimulus programs appear to have prevented most of the feared losses, and banks have begun to release reserves this year.

The lender said that it had a $1.6 billion boost in the second quarter as it released reserves amid an improved U.S. economic outlook.

Still, given the industry’s sluggish loan growth this year, analysts will want to hear CEO Brian Moynihan’s outlook for loans in the second half. The bank said Wednesday that its book of loans grew in the second quarter for the first time since early 2020.

On Tuesday, JPMorgan Chase and Goldman Sachs each posted results that beat expectations, helped by strong revenue from Wall Street advisory activities.  

Shares of Bank of America have climbed 31% this year before Wednesday, exceeding the 16% gain of the S&P 500 Index.

This story is developing. Please check back for updates.

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Business

Home Depot (HD) earnings Q4 2020

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People wear protective face masks outside Home Depot in the Flatiron district as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 8, 2020 in New York City.

Noam Galai | Getty Images

Home Depot’s fourth-quarter earnings surged past investors’ expectations on Tuesday, as consumers continued to invest in their homes due to the pandemic and strength of the real estate market.

Shares are down more than 1% in premarket trading, after the company did not provide an outlook for the year.

Home Depot Chief Financial Officer Richard McPhail said the retailer is not sure how long the pandemic will last and how that may influence consumer spending. He said if demand from the second half of last year continues, it would lead to slightly positive same-store sales growth and an operating margin of at least 14% this year.

Here’s what the company reported for the quarter ended Jan. 31 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $2.65 vs. $2.62 expected
  • Revenue: $32.26 billion vs. $30.73 billion expected

Home Depot’s net income rose to $2.86 billion, or $2.65 per share, up from $2.48 billion, or $2.28 per share, a year earlier. Analysts surveyed by Refinitiv expected earnings per share of $2.62.

Net sales rose 25% to $32.26 billion from $25.78 billion a year ago, and outpacing estimates of $30.73 billion.

Its U.S. same-store sales jumped by 25%. Its overall same-store sales grew by 24.5%, higher than the 19.2% growth that analysts expected, according to a StreetAccount survey. The growth is in line with what Home Depot reported during the second and third quarter, when it benefited from keeping doors open as an essential retailer.

Home Depot also announced Tuesday that its board approved a 10% increase in its quarterly dividend to $1.65 per share.

This story is developing and will be updated.

Read the complete press release here.

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Entertainment

China box-office record reveals global pent-up demand for movies

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Imax broke its box-office records in China over the Lunar New Year holiday weekend and the results foretell what will happen when more U.S. movie theaters resume operations this summer, CEO Rich Gelfond told CNBC on Tuesday.

The company, which produces immersive movie experiences, said it grossed $25 million between Friday and Sunday, representing a 45% increase from a pre-pandemic record.

“It tells you [that] when it’s safe to go outside and people want to go, they’re going to run to go to the movies,” said Gelfond, who appeared on “Closing Bell” after trading ended for the day on Wall Street.

“Detective Chinatown 3,” a comedy adventure that was postponed from its Lunar New Year release last year, generated a large portion of Imax’s ticket sales during the three-day period. The film brought in $23.5 million, the best results Imax said it has ever seen for a Chinese film. The action film “A Writer’s Odyssey” and “New Gods: Nezha Reborn” animation also helped Imax reach both gross attendance and gross sales highs.

Imax shares coming off the news rallied more than 6% on Tuesday, its best day since November. The stock closed at $19.85 and is up more than 5% after hours.

Imax admitted more than 1 million people to theaters in China on Friday, its best one-day attendance on record. The results come despite capacity limitations that remain in place on entertainment establishments in China. The $25 million Imax grossed at the box office was better than what it saw during the comparable opening week in 2019, which preceded the coronavirus pandemic.

Most theaters in China have 75% capacity limitations, while parts of the country seeing higher transmissions of Covid-19 are limited to 50%. U.S. theater restrictions differ by state. Restrictions range from 25% capacity in Minnesota to 50% in Indiana to 100% in Alaska, according to data kept by the National Association of Theatre Owners.

The Lunar New Year seven-day holiday ends Wednesday. Theaters were closed in China this time last year as the country shut down in response to the rapidly spreading virus that was first discovered in late 2019 in the city of Wuhan in Hubei province.

The movie rush was fueled by the traditional travel season in China being largely put on hold due to coronavirus restrictions. With travel plans scrapped, millions spent time at the movies.

Gelfond said Imax had expected strong turnout in China over the weekend.

“I think the only thing you can say is it’s pent-up demand, that people just got tired of sitting on their couches and, you know, watching streaming or whatever else they did,” he said. “I think they’re just happy to get out, and I think it foreshadows the rest of the world.”

Amid the pandemic, Imax’s business revenues plunged 74% in 2020 through September from its first three quarters the year before. The company is set to report fourth-quarter and full-year 2020 performance next month.

Gelfond said in December that 2021 U.S. movie releases, including a slate of films that were postponed from initial releases last year, would present “an embarrassment of riches” for Imax, should theaters in the country open up early in the year.

For the movie industry at large, mainland China generated sales of 6.77 billion yuan, or $1.05 billion, as of Tuesday for the holiday week, according to online ticketing platform Maoyan Entertainment. That figure tops the record 5.9 billion yuan brought during the same period in 2019.

Since theaters reopened there in June, box-office revenues have been climbing. Coronavirus cases have declined precipitously in countries such as China, Australia and South Korea, and movie ticket sales have been increasing.

Global movie ticket sales plunged 70% in 2020 from the year prior. Asia Pacific ticket sales made up about 51% of global sales, up from 41% in 2019, based on information from Comscore and Gower Street. The U.S. and Canadian box office made up just 18% of sales in 2020, down from 30% in 2019.

— Reuters contributed to this report.

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Business

American Airlines to send staff furlough notices again with travel demand low

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American Airlines on Wednesday said it will send furlough notices this week to about 13,000 employees as a second round of federal payroll aid is set to expire next month and travel demand remains in tatters.

“The vaccine is not being distributed as quickly as any of us believed, and new restrictions on international travel that require customers to have a negative COVID-19 test have dampened demand,” American’s CEO Doug Parker and President Robert Isom wrote in a note to staff.

Rival United Airlines last Friday sent similar furlough warnings to 14,000 staff members.

The latest $15 billion Congress approved for U.S. carriers late last year required airlines to recall the employees they furloughed in the fall and maintain payroll through March 31. It was the second round of Covid aid for the industry; Congress gave airlines $25 billion last March to keep them from cutting employees through the fall.

Airline labor unions are now seeking $15 billion more in federal payroll support for the industry to keep jobs through Sept. 30 and American’s Parker and Isom said they back another round of aid.

“We are fully behind our union leaders’ efforts to fight for an extension and we will lend our time and energy to support this effort in every way we can,” they said.

Fresh from reporting record annual losses of $34 billion, U.S. airline CEOs last month warned they didn’t expect a strong rebound in air travel in the near future.

Employers are legally required to give staff notice about possible layoffs or temporary furloughs generally 60 days in advance. The notices do not guarantee that recipients will ultimately lose their jobs.

American is offering early retirement programs for employees who have been in their workgroups for more than 10 years, including up to $150,000 in a retirement health reimbursement package and some travel benefits. It is also rolling out leaves of absence for a year or 18 months with partial pay.

“Obviously, issuing these required WARN notices isn’t a step we want to take,” Parker and Isom said. “Tens of thousands of our colleagues have faced extreme uncertainty about their job security over the past 12 months, and that’s on top of the emotional stress all of our team has faced during an incredibly difficult year.”

American’s CEO Parker warned staff last week that the carrier is still overstaffed for current demand projections and that furloughs could be on the way.

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Business

United Airlines warns thousands of workers that their jobs are at risk

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A United Airlines Boeing 737-800 and United Airlines A320 Airbus on seen approach to San Francisco International Airport, San Francisco.

Louis Nastro | Reuters

United Airlines said the jobs of roughly 14,000 employees are at risk when a second round of federal aid expires this spring, the latest sign of how the industry is struggling to regain its footing in the coronavirus pandemic.

Companies are legally required to inform employees if their jobs are at risk in advance and it does not mean they will ultimately lose their employment. United is turning to new voluntary measures to reduce its headcount.

United and American Airlines recently started recalling thousands of employees they furloughed when the first round of government payroll support expired in the fall. Congress approved additional aid last year for the industry, on the condition that they call back furloughed workers and maintain payrolls until March 31. United told employees last year that the callbacks would likely be temporary.

“Despite ongoing efforts to distribute vaccines, customer demand has not changed much since we recalled those employees,” the airline said in a staff note Friday, which was seen by CNBC. “When the recalls began, United said most recalled employees would return to their previous status as a result of the fall furloughs around April 1.”

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