On Monday Citigroup Inc's and Bank of America Corp's shares saw a very positive rise and both banks expect to report first quarter profits in the same line as what was forecast last week by Wells Fargo & Co.
Citigroup shares climbed 25 percent to $3.80, its highest price since Feb. 9 while Bank of America Corp., the largest U.S. bank, gained 15 percent with their shares rising 8.4 percent to $10.35.
Wells Fargo, the second-biggest U.S. home lender, last week reported about $3 billion in first-quarter net income, up from $2 billion a year earlier – figures topping analyst expectations.
Citi, the New York-based lender that received three U.S. government rescue packages will later this week report first-quarter profits and has decided to include Nikko Citigroup Ltd. in its plan to sell Nikko Cordial Securities Inc. and Nikko Asset Management Co. in Japan, Kyodo News reported on Monday, citing sources familiar with the matter.
Many investors had previously though their shares would decline had sold Citigroup and Bank of America shares in a bet they would decline. Some of those short sales must be undone when the banks' shares rise too much, which has also likely lifted the banks’ shares, Ellman said.
Analysts however remind investors of the significant risks banks are facing including loans write downs in areas ranging from commercial property to credit cards.
Alpine Woods portfolio manager, Peter Kovalski, commented, Wells' announcement may be a little unique to them. The rest of the industry is going to be in the next couple of quarters under continued stress from asset deterioration, Reuters reported.