Despite announcing lower second-quarter earnings, Bank of America shares popped on promises to cut $5 billion in costs as a strategy to counteract a persistently low interest rate, according to the WSJ.
“The banks have been living with lower-for-longer interest rates,” David Hilder, Drexel Hamilton senior equity research analyst, told CNBC. “The banks, led by JPMorgan, have arranged themselves for the continuing economic environment.”
Citigroup earnings also topped expectations after a Brexit-related minitrading boom, growth in Mexico and improving credit profile for customers, the WSJ reports.
After the string of positive results, XLF was up 2.4% and KBE was 3.5% higher over the past week, compared to the S&P 500’s 1.4% gain.
XLF includes a 7.9% tilt toward JPM, 4.9% BAC, and 4.4% C, along with a 33.3% allocation in bank stocks. KBE follows a more equal-weight portfolio of bank stocks, including 2.5% C, 2.5% JPM and 2.5% BAC.