What's going on?

Wells Fargo posted a disappointing quarterly update on Friday, but Citigroup managed to claw back some credibility.

What does this mean?

Wells Fargo has been bracing for an economic slowdown that could leave borrowers unable to pay back their debts, so it put aside $580 million for �loan loss reserves� last quarter. It had to write down $576 million worth of assets tied to its venture capital business too, and its mortgage income fell 79% as higher rates limited the number of new deals and refinancings. All in all, Wells Fargo�s profit didn�t just fall: it fell short of analysts� expectations.

Citi, on the other hand, blew past them, even though it posted a lower profit of its own and had to put aside $1.3 billion in loan loss reserves. That could be down to the 14% more in net interest income compared to the same time last year, as well as the benefit its commodity and currency trading businesses got from volatile markets.

Why should I care?

For markets: Russia is a hard sell.
Citi�s stock jumped 11% after the announcement, but it�s still being beaten by Wells Fargo�s this year. It�s the cheapest of the six biggest US banks by multiple valuation metrics too, probably because it�s the most exposed to Russia. After all, it�s been struggling to sell its consumer and commercial banking business in the country, with the bank projecting that the whole debacle could set it back $2 billion.

Zooming out: We�re all in this together.
Investment managers are experiencing a similar set of issues: BlackRock � the biggest in the world � announced on Friday that the slumping market has dragged down the value of the portfolios it manages. So even though investors poured a net $90 billion more into its range of funds last quarter, BlackRock�s profit still collapsed by a worse-than-expected 30% from the same time last year.