The expectations surrounding the interest rate hike was crushed when the Federal Reserve announced its decision of keeping the interest rates unchanged, on Thursday. Unstable global economy, elevated market volatility and low inflation in the U.S. have driven the Fed’s decision, which led to mixed reactions in the market.

Major banks’ restructuring activities and third-quarter outlook dominated headlines in the last five trading days. Moreover, banks including Bank of America Corporation BAC and The Bank of New York Mellon Corporation (BK - Analyst Report) were in focus for getting electronically inclined as per clients’ preferences.

Now, the interest rate hike, which was anticipated to alleviate top-line pressure to an extent and would have lessened banks’ stress to aggressively trim costs, remains a dream at current level. Amid ongoing pressure on revenues, the strategy of streamlining operations to reduce costs and improve operational efficiency is expected to continue.

 (Read the last Bank Stock Roundup for Sep 11, 2015)

Recap of the Week’s Most Important Developments:

1. Major banks including Citigroup Inc. (C - Analyst Report), Deutsche Bank AG (DB - Analyst Report), Bank of America, Barclays PLC (BCS - Analyst Report), BNP Paribas SA BNPQY, The Goldman Sachs Group Inc. GS, Credit Suisse Group AG (CS - Snapshot Report), HSBC Holdings plc HSBC, Morgan Stanley (MS - Analyst Report) and JPMorgan Chase & Co. (JPM - Analyst Report), The Royal Bank of Scotland Group plc (RBS - Snapshot Report) and UBS Group AG (UBS - Analyst Report) agreed to a settlement worth about $1.87 billion resolving investors’ claims for artificially inflating prices and restricting competition in the credit default swaps (CDS) market, which constituted a violation of the U.S. antitrust law. Terms of the agreement are yet to be finalized and await judge’s approval (Read more: CDS Market Manipulated; 12 Major Global Banks to Pay $1.9B).

2. The New York State Department of Financial Services (“NYDFS”) and four major banks have reached an agreement pertaining to record-keeping at a yet-to-be-launched chat and messaging platform, Symphony Communications LLC. The banks – BNY Mellon, Goldman, Credit Suisse and Deutsche Bank – have consented to keep records available for regulators once they start using Symphony. Further, though the pact was reached with these four banks, the NYDFS believes this agreement will be applicable to all financial entities that would be using Symphony in the future (Read more: Banks, Regulator Reach Pact over Symphony Chat Platform).

3. BofA embarked on a new technological path by launching fingerprint and Touch ID sign-in along with an Apple Watch mobile banking app. These digital enhancements will provide customers a more seamless and secure banking experience. However, BofA has closed or sold more than 200 branches over the past year, attributable to economic and technological changes. While the closure of branches has helped the bank achieve improved efficiency and cost savings, BofA’s steps to deepen its roots in the technologically advanced world has ensured the continuation of its competitive advantage (Read more: BofA Leads with Branchless Banking; Adds Touch ID sign-in).

4. Citigroup has entered into a definitive agreement with Raiffeisenbank a.s. to vend its consumer banking business in Czech Republic. As per the agreement, Citigroup would sell its retail banking and cards businesses along with the transfer of consumer banking employees, branches and ATMs in the Czech Republic.

The deal is expected to close in the first-quarter 2016 although it awaits certain regulatory approvals. Terms of the transaction were undisclosed. However, Citigroup will continue to focus and expanding services to Czech corporations, financial institutions and public sector clients. The bank will also persistently offer services to its multi-national clients with operations in Czech (Read more: Citi Divests Consumer Banking Business in Czech Republic).

5. Some major banks have provided third-quarter outlook amid heightened market volatility. BofA’s Chief Executive and Chairman Brian Moynihan forecasted a reduction of 5% to 6% in trading revenue in the upcoming quarter at the Barclay's Global Financial Services Conference in New York.

While revenue from bonds, currencies and commodities trading are expected to be down in the third quarter, increased revenues in the smaller equities trading group are anticipated to mitigate the downfall to some extent. The news came a day after another banking behemoth Citigroup’s Chief Financial Officer John Gerspach predicted third-quarter 2015 trading revenue to drop by 5% year over year, impacted by elevated volatility. (Read more: Citigroup Anticipates Q3 Trading Revenues to Slump 5% Y/Y).

U.S. Bancorp (USB - Analyst Report) also provided some updated guidance for the third-quarter 2015. The company had launched  the sale of its student loans. However, following disruption in the student loan securitization market, the company will now return the student loans to its portfolio. For this purpose, the company expects to recognize a negative market adjustment in the range of $55–$60 million in the third quarter.

Also, the company expects expenses of $55 million to $60 million in the quarter relating to mortgage compliance and costs for talent upgrade. However, the total impact of these events will be neutral as the company expects a VISA gain of $120 million to $130 million in the third quarter.

Price Performance

The overall performance of banking stocks was mixed. Here is how the seven major stocks performed:
 

In the last five trading sessions, U.S. Bancorp and Citigroup were major gainers, with their shares increasing 1.5% and 1.1%, respectively. However, BofA declined 1.1%.

Over the last six months, JPMorgan was the top performer, with the shares surging 3%. However, U.S. Bancorp, Capital One Financial Corporation (COF - Analyst Report) and Wells Fargo & Company (WFC - Analyst Report) slumped 6.3%, 6.0% and 5.4%, respectively.

What's Next in the Banking Universe?

In the coming five days, no major unprecedented incident is expected on the banking front. Hence, bank stocks should continue performing in a similar fashion.