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Biz Links Current Issue Q3-02 Index Q2-02 Index Q1-02 Index Q4-01 Index Q3-01 Index Q2-01 Index Q1-01 Index Prior Financial Services Updates Oct 2004 Sept 2004 August 2004 July 2004 June 2004 May 2004 Feb 2004 Jan 2004 Dec 2003 Nov 2003 Oct 2003 |
NOTE: Please confirm through your own research any numbers on which you are to make a buy, sell or hold decision. Monthly Sector Summary During first two weeks of November, the year-to-date sector price performance went from a gain of 1.95% to a 7.78% gain, 04 EPS growth estimates have not been updated, and yields went from 3.34% to 3.16%. The 10-year Treasury note, which yielded 4.06% on 10-29, is now 4.20% - up 14 basis points for the month]. UBS Posts Slight Drop In Third-Quarter Profit WSJ 11-02-2004 UBS AG Tuesday reported its net profit fell slightly in the third quarter, as its investment bank suffered from a drop in revenue. The Zurich-based bank said net profit fell to 1.67 billion Swiss francs ($1.39 billion or €1.09 billion) from 1.69 billion francs in the year-earlier period. Overall revenue rose 19% to 10.15 billion francs from 8.5 billion francs, boosted by income from its holding in Swiss utility Motor-Columbus AG. In the latest period, Motor-Columbus contributed 17 million francs to UBS's net profit, the bank said. UBS's financial businesses reported net profit of 1.65 billion francs, down 2% from 1.69 billion francs. A rise in revenue at its private-banking operations, which UBS calls wealth management, failed to offset a drop in investment-banking revenue. The investment-banking unit suffered as markets slowed at the end of last quarter, when low volatility and dampened investment pushed down revenue from fixed income, rates and currencies by 15%, the bank said. UBS said it attracted 20.5 billion francs in new funds to the bank, down 11% from 23 billion francs. Its wealth-management operations accounted for 16.7 billion francs. The third quarter was the first period in which UBS included its 55.6% participation in Motor-Columbus in its accounts. The bank said it is holding the stake as a financial investment only and plans to dispose of it. UBS said that despite uncertainty weighing on financial markets, which could damp investor activity, 2004 is shaping up to be one of the bank's best years. The bank said its full-year profit is expected to rise higher than its 2003 earnings, but levels of market activity have yet to snap back from subdued summer levels. "With our underlying business we are confident that we can fully outperform 2003, but after the summer slowdown, we haven't seen a significant pick-up of activity levels," Chief Financial Officer Clive Standish said. Mr. Standish said activity levels may pick up after the U.S. presidential elections, provided a winner is declared quickly. Its investment banking unit has a significant backlog in activity that may come into flow in the fourth quarter and the beginning of next year, he added. These include initial public offerings and finance activities in the U.S., Europe and Asia. In August, the company said the second half of 2004 was unlikely to be as strong as the first half, as stellar results from financial-market trading early in the year were unlikely to be repeated. At the time, the bank pointed to the expansion of its huge wealth-management unit as a cushion against trading volatility. "Success cannot be built on trading income alone," Chief Executive Peter Wuffli said. "That's why we are focused on the success and growth of our asset-management franchise." Citigroup's Scandals, Profits, and the Stock Carol Loomis Forbes 11-14 Charles O. "Chuck" Prince has been CEO at Citigroup for just over a year—he succeeded the larger-than-life Sandy Weill on Oct. 1, 2003. And we can think of him as having endlessly fought a war, on three separate fronts, with a wide range of results. The first front for Prince, of course, has been scandal—one embarrassment after another. Citi has been a serial sinner, seldom out of the news. The second front is Citi's bottom line, which in 2004 has been beaten down by an amazing $8 billion in scandal-generated charges but has still come through triumphantly. If Citi manages to earn in the fourth quarter what it did in the third, it will have no less than $17 billion in profits for 2004. That would be its second-best year, close behind the $17.8 billion earned in 2003. The third front is the company's stock, which they live and die for at Citi and which during Prince's reign has been a rank disappointment, rising by a mere 3%. Meanwhile the U.S. banking companies closest to Citi in size have done much better over the same period: Bank of America gained 22%, and J.P. Morgan Chase 14%. The low-class state of the stock—Citi sells at about 12 times trailing earnings—suggests that the market has been more impressed by the scandals than Citi's powerful profits. That's no wonder, considering the large amounts of newsprint Citi's sins have consumed. The huge charges the company took in May are the residue of the Wall Street scandals—WorldCom, Enron, and the like. Next, the Federal Reserve fined Citi $70 million, a record in the consumer-lending field, for abuses in its consumer-finance division. And in China Citi suspended two executives who, it says, lied to regulators and to the company (about matters it won't reveal). Month Ending Sector Summary During the first two weeks of November, the year-to-date sector prices rose from a decrease of 0.89% to a increase of 5.35%. 04 EPS growth estimates were not updated. Yields went from 0.97% to 0.92% Lehman Gambles on Going Solo - Firm Built on Bonds Susanne Craig, WSJ 10-13-2004 Last year, data-storage firm EMC Corp. decided to give a big investment-banking assignment to Goldman Sachs Group Inc., bypassing rival Lehman Brothers Holdings Inc. Richard Fuld, Lehman's chief executive, was determined that wouldn't happen again. A few months later, when EMC was looking for bankers on another deal, Mr. Fuld flew to Boston in one of Lehman's private jets to make the pitch in person. "It was very influential," says EMC Chief Executive Joseph Tucci. That level of attention, unusual for what was a relatively small deal, helped win Lehman the business. Despite a long and storied history, Lehman is not a heavyweight, with net revenue almost half that of Goldman Sachs and a reputation as a rough-and-tumble bond trader. In competing with Wall Street's top tier, Mr. Fuld is defying conventional wisdom that says smaller firms have to sell out to conglomerates to survive. Lehman is betting it can be a potent rival to investment banks including Goldman Sachs and Morgan Stanley by burnishing its credentials in businesses such as investment banking, Wall Street's biggest money maker. Home Page Factoids Previous Update
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