morgan stanley on monday cut its rating on citigroup inc and lifted its view on bank of america corp as it assessed the impact of the ukraine war on big names from the financial sector “war changes everything” wrote morgan stanley analyst betsy graseck in a note to clients “fatter tail risks require more capital and liquidity” this dynamic may cause banks to cut back on their stock repurchases she said meanwhile high inflation will also challenge consumers from the lowest income bracket morgan stanley is already seeing “the beginnings of a cycle” in subprime auto and other lower quality lending categories graseck wrote also read goldman jpmorgan wind down russia biz as war reshapes macroeconomic landscape for banks graseck cut her view view on citigroup c to underweight from equal weight and reduced its price target to 60 a share from 75 deglobalization will pressure revenue at citi and slow its efforts to exit markets in mexico and asia and impact valuation she wrote citigroup’s 2023 earnings estimate was lowered to 748 a share from 784 a share on average wall street analysts expect citigroup to earn 779 a share in 2023 according to a factset survey shares of citigroup fell 22 in midday trading monday the stock was down 80 so far this year compared to a loss of 52 by the sp 500 index spx and a slim loss of 02 by the financial select sector spdr etf xlf  bank of america bac meanwhile drew an upgrade to equal weight from underweight and a price target reduction to 49 a share from 51 a share but the stock bac still declined 20 in midday trading “bac’s longheld strategy of responsible growth comes with tighter underwriting standards and strong credit quality as evidenced by their low loanloss ratios under the severely adverse case in the annual fed stress test” graseck wrote bank of america is also poised to benefit as the federal reserve hikes the cost of lending morgan stanley expects six rate hikes in 2022 and four in 2023 these moves will drive an expected 16 compound annual growth rate in bank of america’s net interest income over the next two years don’t miss fed raises interest rates for first time in four years and plots series of hikes to fight inflation “bac is also one of the most rate sensitive names in the group with a 100 basis point parallel shift in the yield curve driving an incremental 20 to earnings per share” graseck wrote “bac’s skew to primarynoninterest bearing consumer deposit accounts means that they should have a relatively lower deposit beta as rates move higher” morgan stanley cut its 2023 earnings forecast for bank of america to 409 a share from 424 a share analysts currently expect bank of america to earn 384 a share in 2023 according to a factset survey shares of bank of america fell 15 on monday the stock is now down 32 in 2022 morgan stanley also rerated five other names in the financial sector including a downgrade of alliance data systems corp ads to equal weight from overweight and a price target reduction to 67 a share from 104 a share and an upgrade of bank of new york mellon corp bk to equal weight from underweight and a price target change to 58 from 65 morgan stanley cut its rating on synchrony financial syf to equal weight from overweight and trimmed its price target to 40 a share from 56 and also downgraded shares of fifth third bancorp fitb to equal weight from overweight while reducing its price target to 50 from 56 a share in addition analysts changed their rating on mt bank corp mtb to underweight from equal weight and cut their price target on the stock to 179 a share from 185 a share also read citi adds mt bancorp to focus list as favorite among six regional banks