Over the last four trading days, volatility in the stock market has affected the banking stocks as well. The main highlight was the release of the Fed minutes of the January FOMC meeting. The latest report highlights that improving economic growth, stimulus from the recent tax cuts and rise in inflation support a more aggressive stance by the Fed in hiking rates.
Further, given the growth in economy, low unemployment rate and healthy consumer sentiment, the demand for loans and other related products of banks will rise. Overall, though these will be beneficial for the banks’ financials, the markets seem to be wary of such a scenario. Thus, this led to significant volatility and bank stocks’ performance turned bearish over the last four trading sessions.
Mortgage rates were also on an upswing, with 30-year mortgages averaging 4.40% (highest since April 2014), as money was pulled out of the bond market. However, homeowners seeking lower rates for refinancing are definitely big-time losers. Rise in mortgage rates will limit refinancing activity.
Coming to company-specific news related to banks, efforts to strengthen profitability persisted. Further, past business misconduct continued to haunt over the last four trading days. Moreover, banks are undertaking initiatives to pass on the benefits from lower tax rates to employees and shareholders.
Important Developments of the Week
Citigroup  (C) is planning to serve clients in Asia with assets as low as $50,000, with services that it generally provides to the high-end clients. This was reported by Financial Times. The bank is providing portfolio diversification and wealth-planning services to the Citigold and Citi priority customers.
After having grown assets by 17% last year in the Asia-Pacific region, the company is seeking to achieve a similar growth rate in the region in 2018. (Read more: Citigroup Aims to Extend Footprint in Asia-Pacific Region) Citigroup’s chief executive officer (CEO) — Michael Corbat — received about 48% pay hike in his total compensation package. Per the Securities and Exchange Commission (SEC) filing, his annual salary has been increased to $23 million in 2017.
