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In This List

JPMorgan's Q4'19 profit up YOY; Visa, Plaid in $5.3B deal

StreetTalk – Episode 69: Banks left with pockets full of cash and few places to go

Street Talk – Episode 69: Banks left with pockets full of cash and few places to go

Street Talk Episode 68 - As many investors zig away from bank stocks, 2 vets in the space zag toward them

Street Talk Episode 66 - Community banks tap the debt markets while the getting is good

JPMorgan's Q4'19 profit up YOY; Visa, Plaid in $5.3B deal

JPMorgan Chase & Co. reported fourth-quarter 2019 net income applicable to common stockholders of $8.09 billion, or $2.57 per share, compared with $6.64 billion, or $1.98 per share, in the fourth quarter of 2018.

Citigroup Inc. posted fourth-quarter 2019 net income of $4.98 billion, or $2.15 per share, compared with $4.31 billion, or $1.64 per share, in the year-ago period.

Wells Fargo & Co. reported net income applicable to common stock of $2.55 billion, or 60 cents per share, for the fourth quarter of 2019, compared with $5.71 billion, or $1.21 per share, a year ago.

First Republic Bank is also expected to report its fourth-quarter and full-year 2019 financial results today.

Visa Inc. has entered into a definitive agreement to acquire financial technology firm Plaid Inc. for $5.3 billion. The deal is expected to close within the next three to six months. The announcement comes approximately a month after tensions flared between PNC Financial Services Group Inc. and Venmo over the sharing of customer bank account data via Plaid.

Wall Street's bonus culture faces a threat as technology and automation take center stage, Bloomberg News reports. As banks boost the hiring of coders and programmers, traders can also expect to receive bonuses based on the strength of desks or units. According to a 2018 PricewaterhouseCoopers report, given the new environment, about one-third of financial services jobs could be displaced by the mid-2030s, according to the news outlet.

A low-interest-rate environment and growing competition are expected to stimulate refinancing and could result in more frequent payoffs for consumer and commercial loans during the year, American Banker reports. Higher payoff levels could lead to greater pressure on loan balances and underwriting in the coming months. According to economists, banks are expecting a change in the cycle by adopting tighter underwriting standards in certain sectors, the news outlet added.

JPMorgan has placed one of its senior credit traders, Edward Koo, on leave as the company investigates whether he violated its policies by using WhatsApp to communicate with colleagues, Bloomberg News reported, citing people with knowledge of the matter. A source told the news outlet that the discussions over the messaging app were related to the market, but the company's review has not suggested any wrongful activity and may not even result in any further action being taken, according to the report.

On another front, JPMorgan faces trouble as the Indian Supreme Court has allowed its federal anti-money laundering agency to seize the assets of the company's Indian unit, if required, for allegedly violating foreign investment rules, Bloomberg News reports, citing a lawyer who was part of the proceedings.

According to industry insiders and analysts, the outlook on Citi's 2020 strategy does not look great, Reuters reports. The New York-based bank's corporate banking unit is looking to pick up pace this year. However, geopolitical uncertainty and recession fears are restricting corporate clients from looking for deals or financing. Additionally, Citi is yet to gain traction and capture market share from JPMorgan, Morgan Stanley and Goldman Sachs Group Inc.

Activist hedge funds saw great returns in 2019 after making concentrated bets on firms from different segments, Bloomberg News reports. The firms, which buy stakes in companies and push for changes, found great success amidst an environment of less shareholder activism.

In an open letter, activist investor Driver Management Co. LLC urged the shareholders of Community Bankers Trust Corp. to join its call for the company to sell itself to "one of the many logical acquirers in the marketplace." Driver Management said it is concerned about Community Bankers Trust's standalone prospects, with the company facing "significant challenges," compounded by an "extremely competitive environment," when it comes to lowering deposit costs, prudently growing loans, continuing to rationalize costs and sustaining long-run profitability.

The movement of the Federal Reserve's benchmark interest rate towards the lower end of its target range is hinting at another rate adjustment by the central bank at the end of January, Bloomberg News reports. The effective fed funds rate, which is related to the central bank's implementation of monetary policy, has been sliding towards the lower band after the Fed undertook repurchase agreement operations and Treasury-bill buying to address volatility in the funding market.

The Federal Housing Administration is trying to persuade banks to rejoin its program by promising milder enforcement of the False Claims Act, American Banker reports. Mortgage Bankers Association Residential Policy Senior Vice President Pete Mills said the servicing rules and processes at the FHA are "outdated and expensive," according to the news outlet. Further, Keefe Bruyette & Woods Managing Director Bose George added that despite changes made by the Department of Housing and Urban Development and the FHA, banks are still exercising caution towards the market due to risks stemming from the origination side.

In other parts of the world

Asia-Pacific: India mulls new regulatory body; AMP to consolidate operations

Europe: Possible new Wirecard probe; Danske job cuts; Credit Suisse fossil fuel defense

Middle East & Africa: Bank Audi mulls unit sale; Beltone eyes expansion; SCB Cameroun gets new boss

Now featured on S&P Global Market Intelligence

Truist, Piper deals push new names to top of US bank M&A league tables in 2019: Two mergers in both the banking and financial advisory space changed the face of the U.S. bank M&A league tables in 2019.

J.P. Morgan tops bank common equity offerings in 2019: J.P. Morgan Securities led the way in underwriting both common and preferred equity offerings in 2019 for the U.S. bank and thrift industry, according to S&P Global Market Intelligence's latest league table.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng decreased 0.24% to 28,885.14, while the Nikkei 225 rose 0.73% to 24,025.17.

In Europe, around midday, the FTSE 100 was down 0.23% to 7,600.13, and the Euronext 100 was down 0.14% to 1,154.97.

On the macro front

The NFIB Small Business Optimism Index, CPI and the Redbook are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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