Nomura Securities on U.S. Banks - 4Q So Far: Paying For Growth - Halftime for Bank Earnings
Tweet
Share
E-mailGet Alerts JPM Hot Sheet
Price: $351.58 +0.01%
Rating Summary:
22 Buy, 25 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
22 Buy, 25 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Join SI Premium – FREE
Nomura Securities on U.S. Banks - 4Q So Far: Paying For Growth - Halftime for Bank Earnings
Analyst, Brian Foran, said, "About one third of the banks have reported and so far the theme is better loan growth, as expected. That said, estimates aren’t necessarily growing along with the loans given a) a seasonal slowdown in 1Q, b) higher expenses, and c) costs of loan growth – namely provisions for new loans, and slower capital ratio build. Specifically: loan growth is strong, but slower seasonality ahead; NIMs less bad, led by big banks in a surprise; fees – mortgage divergence; cost of growth; could SunTrust be a loss? Valuations – back to normal? Regionals are at 12x consensus 2012, and revisions are likely to be muted post the quarter. Investors point to 2013 at 9.6x to justify buying regionals. We get that loan growth is better, and that US macro and housing are improving. That said, we see more value in cards – same growth, lower multiples."
"Fees – mortgage divergence: The stand out in fees (excluding capital markets trends) has been mortgage origination. Trends have diverged based on revenue recognition. Banks that book at rate lock will generally see mortgage revenues flat to down in 4Q vs. 3Q (JPMoragan (NYSE: JPM), PNC Financial (NYSE: PNC) so far; BofA (NYSE: BAC), SunTrust (NYSE: STI), BB&T (NYSE: BBT) still to come). Banks that book at funding will generally be up this quarter (Wells Fargo (NYSE: WFC), U.S. Bancorp (NYSE: USB) so far; Fifth Third (Nasdaq: FITB), Huntington (Nasdaq: HBAN), Regions (NYSE: RF) still to come).
Analyst, Brian Foran, said, "About one third of the banks have reported and so far the theme is better loan growth, as expected. That said, estimates aren’t necessarily growing along with the loans given a) a seasonal slowdown in 1Q, b) higher expenses, and c) costs of loan growth – namely provisions for new loans, and slower capital ratio build. Specifically: loan growth is strong, but slower seasonality ahead; NIMs less bad, led by big banks in a surprise; fees – mortgage divergence; cost of growth; could SunTrust be a loss? Valuations – back to normal? Regionals are at 12x consensus 2012, and revisions are likely to be muted post the quarter. Investors point to 2013 at 9.6x to justify buying regionals. We get that loan growth is better, and that US macro and housing are improving. That said, we see more value in cards – same growth, lower multiples."
"Fees – mortgage divergence: The stand out in fees (excluding capital markets trends) has been mortgage origination. Trends have diverged based on revenue recognition. Banks that book at rate lock will generally see mortgage revenues flat to down in 4Q vs. 3Q (JPMoragan (NYSE: JPM), PNC Financial (NYSE: PNC) so far; BofA (NYSE: BAC), SunTrust (NYSE: STI), BB&T (NYSE: BBT) still to come). Banks that book at funding will generally be up this quarter (Wells Fargo (NYSE: WFC), U.S. Bancorp (NYSE: USB) so far; Fifth Third (Nasdaq: FITB), Huntington (Nasdaq: HBAN), Regions (NYSE: RF) still to come).
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
- Vireo Growth completes acquisition of C21 Investments
- Wells Fargo Upgrades Portland General Electric Company (POR) to Overweight
Create E-mail Alert Related Categories
Analyst Comments, EarningsRelated Entities
BB&T Capital Markets, Nomura, Earnings, Wells FargoSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
