It isn’t getting any easier on Wall Street.
Bank of America and Citigroup on Thursday reported sharply lower fourth-quarter earnings that disappointed investors. Their results came a day after JPMorgan Chase kicked off earnings season with a similarly weak report.
Shares of all three banks fell more than the overall stock market on Thursday, which was already having a bad day because of the Swiss central bank’s shocking currency move.
The biggest US banks have been hit by a year-end trading slump and rising costs for settling investigations into currency trading, interest rate manipulation and money laundering, among other probes.
After a difficult end to 2014, Citi Chief Executive Michael Corbat warned shareholders he didn’t expect this year to be much better.
“There’s no reason to think the environment in 2015 will be any less challenging,” he said during a call to discuss results.
For the fourth quarter, Citi’s profit plunged 86 percent from a year ago, weighed down by large legal bills and weaker-than-expected trading revenue.
The bank posted profit of $350 million after incurring $3.5 billion in legal and related charges. Earnings of 6 cents per share were lower than analysts’ expectations for 9 cents, according to Thomson Reuters.
While the biggest drag was legal bills, Citi was also hurt by the slowdown in trading activity. Trading revenue dropped 14 percent, to $2.46 billion, from the previous year.
The results frustrated investors, some of whom believed the pickup in market volatility toward the end of the year would boost trading rather than curtail it.
Citi shares fell 3.6 percent to close at $47.26.
Bank of America, the second-biggest US bank, didn’t fare much better toward the end of last year.
Profit fell 11 percent from a year ago as lower interest rates hurt fixed-income asset trading. Net income was $3.1 billion, or 25 cents a share — well below analysts’ estimates for 31 cents a share, according to Thomson Reuters.
Trading revenue dropped 20 percent from a year earlier, to $2.37 billion.
The earnings are the first for the bank after it reached a $17 billion settlement with the Justice Department over mortgage-related claims.
The bank, run by CEO Brian Moynihan, set aside reserves for that settlement in the third quarter. As a result, legal costs plummeted 83 percent, to $393 million, in the fourth quarter.
BofA shares tanked 5.2 percent to $15.20 on Thursday.
JPMorgan, the biggest US bank, dropped 3.2 percent to $54.99.
The bank, led by Jamie Dimon, said on Wednesday that fourth-quarter profit fell in part because of $1 billion in legal costs in the wake of government probes.