U.S. banks retain active financing exception: Citigroup (NYSE:C) and Bank of America (NYSE:BAC) hit highs

Posted by on Jan 03, 2013

Newly reached fiscal cliff agreement has made it possible for US banks and other large cross-border companies to retain a key tax break covering billions of dollars in foreign income. Multinationals would be allowed after extension of the so-called “subpart F exception for active financing income” to defer paying US taxes on certain financial business deals performed outside the US. The U.S. law imposes tax on that income only when companies brought back to the United States.

General Electric Company (NYSE:GE) and U.S. banks including Bank of America, The Bank of New York Mellon Corporation (NYSE:BK), Citigroup and JPMorgan Chase have teamed up to shape the Active Financing Working Group, to lobby for extending the exemption in recent years. The Center for Responsive Politics said that lobbying firm Elmendorf Ryan has been paid $1.03m since 2009 by the group to campaign for the tax break to be renewed. The Senate Joint Tax Committee predicts extending the exemption will cost the US Treasury some $9.4bn in lost revenue this year.

Both Citi and BofA marked new high on Wednesday.

Citigroup Inc.(NYSE:C)’s price increased in the last trading session to hit a new 52-week high of $41.40. The stock was trading on above-average volume. The stock traded at a volume of 45.65 million shares at a price gain of 4.27%. The share price is now up26.11% for the past three months. Latest closing price was 11.22% above its 50-day moving average and 27.91% above its 200-day moving average.


While trading at volume higher than average, Bank of America Corp (NYSE:BAC) climbed 3.62% yesterday to mark new record high of $12.15 and extended gains for the last 12 months to 121.55%, trading at a volume of 236.02 million. Shares have risen 47.43% over the trailing 6 months. The stock is currently trading 19.68% above its SMA 50 and 38.89% above its SMA 200.

Over the last 12 months for Wells Fargo & Company(NYSE:WFC), a return on equity of 12.68 percent was realized due to the financial situation and earnings per share reached a value of $3.19. Last fiscal year, $0.88 has been paid in form of dividends to investors. Earnings are projected to move up 8.93 percent for the coming five years.

The stock, on Wednesday, closed at $35.05, up 0.87 points or 2.55% from previous close and at a distance of +33.76% from 20-day simple moving average. The boost was seen after a report that the bank’s Director Judith Runstad bought 7,840 shares for a price per share of $28.20 for a total cost of $ 221,049.00 on Dec 20th 2012.

KeyCorp (NYSE:KEY) moved up 4.28% yesterday and its price history showed most recently beta was at 1.30. Overall the last 12 months, the percentage change in the price was 9.75%, hitting the highest of $9.12 on Sep 21, 2012 while lowest level in that period was $6.80 on Jun 04, 2012.


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