Nomura Securities on U.S. Banks: Missed The Memo - Sensitivity to Rising Rates
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Rating Summary:
11 Buy, 23 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
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Nomura Securities on U.S. Banks: Missed The Memo
Analyst, Brian Foran, said, "We got the memo that the Fed was keeping rates on hold through 2014 back in January, but missed the memo that they were just joking. Judging by the number of client requests for bank earnings sensitivity to rising rates, investors have gotten the memo that rates are going up sooner. As a result, we present our estimate of EPS sensitivity to a 100bp increase in Fed Funds. You can choose to read it now, or file it away and dust it off in two years."
"We present our estimate of EPS sensitivity to a 100bp increase in Fed Funds. Based on 10k disclosures, every bank but two that we cover would benefit if Fed Funds went up by 100bp. A handful of banks have a 10-15% uplift to EPS if rates go up 100bp. This would include Regions (NYSE: RF), City National (NYSE: CYN), Zions (Nasdaq: ZION), Synovus (NYSE: SNV) and First Horizon (NYSE: FHN) and Comerica (NYSE: CMA). For the rest of the banks rising rates is a single digit uplift to EPS – thus higher rates help, but it’s really more about an improving economy.
Analyst, Brian Foran, said, "We got the memo that the Fed was keeping rates on hold through 2014 back in January, but missed the memo that they were just joking. Judging by the number of client requests for bank earnings sensitivity to rising rates, investors have gotten the memo that rates are going up sooner. As a result, we present our estimate of EPS sensitivity to a 100bp increase in Fed Funds. You can choose to read it now, or file it away and dust it off in two years."
"We present our estimate of EPS sensitivity to a 100bp increase in Fed Funds. Based on 10k disclosures, every bank but two that we cover would benefit if Fed Funds went up by 100bp. A handful of banks have a 10-15% uplift to EPS if rates go up 100bp. This would include Regions (NYSE: RF), City National (NYSE: CYN), Zions (Nasdaq: ZION), Synovus (NYSE: SNV) and First Horizon (NYSE: FHN) and Comerica (NYSE: CMA). For the rest of the banks rising rates is a single digit uplift to EPS – thus higher rates help, but it’s really more about an improving economy.
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