The news at a glance
Mortgage slump curbs profits; Apple hires Burberry CEO; JPMorgan to admit fault; Twitter lists on NYSE; PepsiCo sodas fizzle
Banks: Mortgage slump curbs profitsMost big banks are disappointing investors these days, said Maureen Farrell in CNN.com. Citigroup posted lackluster third-quarter results this week, making it the third major bank to report a hit from slower mortgage lending. The bank said its revenues dropped 5 percent from the same period last year, but its expenses are also down by 4 percent over the same period. Revenue and profits fell across the board, including at Citigroup’s consumer banking, trading, and investment banking units. Mortgage lending at the bank took a steep drop, declining by 20 percent from last year, while its bond-trading unit reported a 26 percent fall.
At least one bank found a way to replace that mortgage income, said Peter Rudegeair in Reuters.com. Bank of America saw enough “growth in its consumer and wealth-management arms” to exceed analysts’ expectations. Profits at its retail banking unit swelled 32 percent, thanks to rising revenue, falling credit costs, and the sale of more credit cards to the bank’s customers. But mortgage income—once a keystone of BofA’s strategy—slid by 71 percent “as higher interest rates made refinancing less attractive” to homeowners. “It’ll never be a huge business for this company,” said CEO Brian Moynihan.
Retail: Apple hires Burberry CEOApple’s retail division has a new director, said Chris O’Brien and Tiffany Hsu in the Los Angeles Times. The computer giant has hired Burberry CEO Angela Ahrendts, “hoping her background melding technology, fashion, and commerce will be the right mix to navigate the future.” Ahrendts will supervise Apple’s online commerce and physical stores. “I have wanted one person to lead both of these teams for some time because I believe it will better serve our customers,” Apple CEO Tim Cook said in a memo to employees. “But I had never met anyone whom I felt confident could lead both until I met Angela.”
Settlements: JPMorgan to admit faultJPMorgan Chase’s fines “are no longer enough to placate the government,” said Ben Protess and Jessica Silver-Greenberg in NYTimes.com. Federal regulators now “want something stiffer”—the bank’s admission of fault after its London traders racked up $6 billion in losses through risky deals. Requiring a statement accepting blame would be “the most aggressive step in reversing a decades-long practice of allowing banks to ‘neither admit nor deny’ wrongdoing,” and would also set a precedent that could expose banks to claims from litigious shareholders.
Tech: Twitter lists on NYSEStep aside, Nasdaq, said Matt Krantz and Alistair Barr in USA Today. In an amendment to its IPO filing this week, Twitter said it will list its shares on the New York Stock Exchange, breaking “a long-standing tradition of high-profile tech companies” listing on the Nasdaq. The social networking company plans to meet with potential investors later this month and begin trading Nov. 15. Losing Twitter to the NYSE “is just the latest high-profile loss for the Nasdaq,” after technical glitches botched Facebook’s IPO last year.
Food: PepsiCo sodas fizzleThe bubble has popped for PepsiCo’s carbonated drinks, said Candice Choi in the Associated Press. As it disclosed third-quarter earnings this week, the soda- and snack-maker reported a 4 percent volume decline in its North American drinks unit, though “stronger snack sales offset” the loss and profits were better than expected. Analysts said a consumer turn away from carbonated drinks may be a good thing for the company. PepsiCo “has perennially played second fiddle” to Coca-Cola in sodas, but leads in the sports and non-carbonated drink categories.