Nomura Securities on U.S. Card: Different Growth for Different Folks - Share Shifts v2
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Price: $61.86 -2.07%
Rating Summary:
26 Buy, 18 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
26 Buy, 18 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Nomura Securities on U.S. Card: Different Growth for Different Folks - Share Shifts v2
Analyst, Brian Foran, said, "Similar growth to start the cycle, similar shrinkage at the trough: Big banks (BofA (NYSE: BAC), Citi (NYSE: C), JPMorgan (NYSE: JPM)) and pure plays (AmEx (NYSE: AXP), CapitalOne (NYSE: COF), Discover (NYSE: DFS)) came into the cycle with roughly equal growth rates in US card. Both came into the cycle with ~5% growth in spending and lending, and at the trough both groups had double-digit declines in both categories."
"Stronger recovery for pure plays: In 2011, spend volume growth recovered to 12% YoY for the pure plays vs. 4% for the big banks. Similarly, in lending, the pure plays are now flat while big banks’ card loan books are still down 7% YoY."
"Growth among the pure plays: Amex had the sharpest decline and rebound, given a discretionary pullback and re-expansion of high-end customers. Discover had the most stability in both spending and lending throughout the cycle, given the absence of a run-off book. CapOne had the deepest contraction in loans, in part due to a larger run-off book than peers, but recent spend volume growth has been the strongest of the group and, in turn, lending data is starting to improve."
"Growth among the big banks: BofA and Citi were most reliant on the big credit lines to mid-tier customers, and unwinding the strategy has led to higher losses and more shrinkage for the past three years. Citi also had outsized shrinkage from the retail partner card book. JPM has had the best spend volume of the big banks. That said, loan volumes have been weaker, as 17% of the legacy Chase book was targeted for run-off. This headwind is getting close to an end."
"The good news: loans are growing again, and it seems that the pure plays can all grow at an above-average rate. The bad news: growth is expensive, as costs and rewards have been pressure points for the past year."
"COF & DFS Buy, AXP Neutral: We rate COF and DFS Buy. COF has had a big move, but both still trade at 7-8x. This implies that they are nogrowth stocks, at a time we think they can grow. AXP is Neutral on more exposure to the rewards war and deceleration in spend volume growth."
Analyst, Brian Foran, said, "Similar growth to start the cycle, similar shrinkage at the trough: Big banks (BofA (NYSE: BAC), Citi (NYSE: C), JPMorgan (NYSE: JPM)) and pure plays (AmEx (NYSE: AXP), CapitalOne (NYSE: COF), Discover (NYSE: DFS)) came into the cycle with roughly equal growth rates in US card. Both came into the cycle with ~5% growth in spending and lending, and at the trough both groups had double-digit declines in both categories."
"Stronger recovery for pure plays: In 2011, spend volume growth recovered to 12% YoY for the pure plays vs. 4% for the big banks. Similarly, in lending, the pure plays are now flat while big banks’ card loan books are still down 7% YoY."
"Growth among the pure plays: Amex had the sharpest decline and rebound, given a discretionary pullback and re-expansion of high-end customers. Discover had the most stability in both spending and lending throughout the cycle, given the absence of a run-off book. CapOne had the deepest contraction in loans, in part due to a larger run-off book than peers, but recent spend volume growth has been the strongest of the group and, in turn, lending data is starting to improve."
"Growth among the big banks: BofA and Citi were most reliant on the big credit lines to mid-tier customers, and unwinding the strategy has led to higher losses and more shrinkage for the past three years. Citi also had outsized shrinkage from the retail partner card book. JPM has had the best spend volume of the big banks. That said, loan volumes have been weaker, as 17% of the legacy Chase book was targeted for run-off. This headwind is getting close to an end."
"The good news: loans are growing again, and it seems that the pure plays can all grow at an above-average rate. The bad news: growth is expensive, as costs and rewards have been pressure points for the past year."
"COF & DFS Buy, AXP Neutral: We rate COF and DFS Buy. COF has had a big move, but both still trade at 7-8x. This implies that they are nogrowth stocks, at a time we think they can grow. AXP is Neutral on more exposure to the rewards war and deceleration in spend volume growth."
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