Citigroup, Bank of America, JPMorgan Chase: Pick a Bank, Any Bank?

In 2013, Citigroup (C) returned 32%, while Bank of America (BAC) rose 34% and JPMorgan Chase (JPM) advanced 36% versus the S&P 500′s 32% return. What does 2014 have in store?

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Jefferies’ Ken Usdin, Bryan Batory and Thomas Shearer expect the good times to continue. They write:

While never free from controversy and incrementally burdened by regulation, this group offers attractive risk/return profiles. We see a path to solid EPS growth, ROA/ROE improvement, and increased capital return, providing an upward bias to stock prices and valuations.

Usdin, Batory and Sheare do play favorites, however, starting Bank of America and JP Morgan Chase at Buy and Citigroup at Neutral. They explain why they like Bank of America…

Bank of America has proven its intent to aggressively settle outstanding litigation, structurally lower its core expense base, and reengage in growing core businesses. The bank has grown its capital ratios to a point where capital return should directionally improve in '14 and beyond. A path toward improved profitability, potential for upward EPS revisions, and higher normalized earnings should result in multiple expansion.

…and JPMorgan Chase:

JPMorgan Chase recently put the largest of its litigation risk concerns to bed, which has allowed investors to re-engage to an extent. JPM still trades at a slightly lower multiple on '15 EPS vs. peers. With EPS closer to ‚normal‛ earnings level than the others, the story is more about execution and market share gains from here, which if successful should lead to additional re-rating over time.

…but feel lukewarm about Citigroup:

Citigroup has made substantial progress on winding-down Citi Holdings, generating excess capital, and improving efficiency. The bank has a path toward incremental EPS growth and ROA/ROE improvement for the next few years. We are concerned about downward EPS revisions on lower trading estimates and a slowdown of emerging markets economies. Downside risk is low with the stock around 1x tangible book, but shares could underperform peers.

Citigroup has gained 0.8% to $16.56 today at 3:34 p.m., while JPMorgan has risen 0.6% to $58.70 and Bank of America is up 0.4% at $16.56.