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Nomura Securities Starts SunTrust Banks (STI) at Neutral

February 6, 2013 8:32 AM EST Send to a Friend
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Price: $38.81 -0.59%

Rating Summary:
    20 Buy, 17 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 26 | Down: 10 | New: 8
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Nomura Securities initiates coverage on SunTrust Banks (NYSE: STI) with a Neutral. PT $31.00.

Analyst Keith Murray comments, "While SunTrust is making progress on reducing expenses and credit is improving, we see NII declining in 2013, given continued NIM pressure; the potential loss of $25-30mn of swap income; and sluggish loan growth. In addition, fee revenue could be under pressure, because while mortgage revenue (11% of revenue in 4Q12) may remain healthy in 2013, it will likely not reach 2012’s strong levels. Finally, while STI has a solid 8.2% Basel III T1C ratio, management is being conservative in its capital return requests, so buybacks are not expected. Mortgage revenue is a key driver for STI, accounting for 11% of core revenues in 4Q12. We expect mortgage revenue to remain strong in 2013. STI is focused on cutting expenses, and headcount declined 8% in 2012, which should bring down comp expense in. Unfortunately, this already appears to be factored into the stock, with 2013 consensus calling for a $440mn expense decline. FY13E EPS at $2.65; FY14E EPS at $2.9."

For an analyst ratings summary and ratings history on SunTrust Banks click here. For more ratings news on SunTrust Banks click here.

Shares of SunTrust Banks closed at $28.76 yesterday.




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