Money centre bank shares have barely recovered 48 per cent of their epic falls during the post Lehman global financial crisis in 2008, vastly underperforming an S&P 500 index that has tripled since it bottomed in March 2009.
I was convinced that Citigroup was the most undervalued money centre bank in New York and wrote at least a half dozen articles in 2012-13 recommending the bank's shares at the 26 to 32 levels.
Money centre bank
shares outperform when the US Treasury bond curve steepens, loan growth surges, net interest rates widen, fees/capital markets income rises from depressed levels and economic growth/asset quality metrics accelerates.
As Wall Street dumps high momentum biotech/internet shares, the world's leading money centre banks
offer the potential for lower risk capital appreciation and rising dividend payouts.
Wall Street views Bank of America as the most rate sensitive among the US money centre banks
, hence any Fed move in June will mean a valuation rerating for the bank.
Money centre banks
have been a loser asset class in January and February as the capital markets price in the cumulative impact of a flatter US Treasury yield curve, financial distress in the energy loan book, regulatory restrictions, mediocre fixed income trading profits and equity trading volumes.