Nomura Securities on U.S. Banks: Stress-Test Results - So Excited, The Fed Just Couldn’t Wait
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Rating Summary:
22 Buy, 19 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
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Nomura Securities on U.S. Banks: Stress-Test Results
Analysts Glenn Schorr& Brian Foran said, "We think the stress test is a modest positive, as it provides a template for banks to pay out more in dividends and buybacks with top-quartile banks sporting 75-100% payout ratios – eg, Amex at 100% payout, JPMorgan Chase (NYSE: JPM) and State Street (NYSE: STT) at 90%, and US Bank at 75%. This is a little higher than we expected (we had thought the top end of the range would be ~70%)."
Comments by bank:
Citigroup (NYSE: C): Capital increase denied, although losses seemed overly harsh and consensus assumptions for buybacks were only a few cents of EPS.
SunTrust (NYSE: STI): Capital increase denied, although company said 1Q results are expected to exceed consensus expectations of $0.29 per share.
Zions (Nasdaq: ZION): The big winner wasn’t even a stress test bank – getting out of TARP with no equity raise.
Regions (NYSE: RF): $900mn equity raise to repay TARP, in line to slightly higher than expected, but loss rates in line with peers.
Fifth Third (Nasdaq: FITB): Capital plan only partly approved, but: a) can re-apply, and b) is allowed to use Vantiv gains to buy back FITB stock.
Analysts Glenn Schorr& Brian Foran said, "We think the stress test is a modest positive, as it provides a template for banks to pay out more in dividends and buybacks with top-quartile banks sporting 75-100% payout ratios – eg, Amex at 100% payout, JPMorgan Chase (NYSE: JPM) and State Street (NYSE: STT) at 90%, and US Bank at 75%. This is a little higher than we expected (we had thought the top end of the range would be ~70%)."
Comments by bank:
Citigroup (NYSE: C): Capital increase denied, although losses seemed overly harsh and consensus assumptions for buybacks were only a few cents of EPS.
SunTrust (NYSE: STI): Capital increase denied, although company said 1Q results are expected to exceed consensus expectations of $0.29 per share.
Zions (Nasdaq: ZION): The big winner wasn’t even a stress test bank – getting out of TARP with no equity raise.
Regions (NYSE: RF): $900mn equity raise to repay TARP, in line to slightly higher than expected, but loss rates in line with peers.
Fifth Third (Nasdaq: FITB): Capital plan only partly approved, but: a) can re-apply, and b) is allowed to use Vantiv gains to buy back FITB stock.
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