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2021-07-12

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Investors to focus on banks' H2 guidance in Q2 earnings report this week

Expect large cap banks to guide lower on net interest income for the back half of 2021, says Morgan

Investors to focus on banks' H2 guidance in Q2 earnings report this week

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Graseck sees Q2 2021 capital markets revenue (including trading and investment banking division) will be down 20% Y/Y.</p>\n<p>Recall that in June, Citigroup(NYSE:C)CEO Mark Mason warned that Q2trading revenue is likely to fall ~30%from year ago and JPMorgan Chase(NYSE:JPM)CEO Jamie Dimonexpects Q2trading revenue higher than $6B, which infers a ~38% drop from the year-ago quarter.</p>\n<p>Morgan Stanley's(NYSE:MS)James Gormanalso anticipatesa more \"normalized\" quarter after unusually strong Q4 2020 and Q1 2021 results. \"Net-net the quarter's going to be good,\" he said at a conference in June.</p>\n<p>Reserve releases are seen continuing in Q2, which have helped bolster earnings the past few quarters, after banks set aside massive piles of cash in Q1 2020 to prepare for uncertainty amid the pandemic. But Morgan Stanley's Graseck also sees net charge-offs improving in Q2 2021 due to higher consumer savings rates, falling jobless claims, and rising wages.</p>\n<p>Seeanalysts' EPS revisions on JPM's quarterly earningsover the past two years in chart below.</p>\n<p><img src=\"https://static.tigerbbs.com/3723b7d58874a81ffb5f252dc0260444\" tg-width=\"724\" tg-height=\"437\"></p>\n<p><b>Midcap banks</b>: Morgan Stanley analyst Ken Zerbe expects most banks to beat consensus EPS in the quarter, helped by lower provision expense. Strong deposit growth and low net charge-offs will provide bright spots.</p>\n<p>\"Fundamentally, we have fairly modest expectations\" for Q2, with the biggest headwind being the lack of loan growth. \"In fact, we are cutting our loan growth estimates by 20 bps in 2Q21 given both weak industry growth and cautious management commentary,\" Zerbe writes in a note to clients.</p>\n<p>Because of that, investors will be watching on managements' outlook for H2 2021.</p>\n<p>He expects SVB Financial(NASDAQ:SIVB)to benefit from stronger investment gains and Leerink revenue and likes Signature Bank(NASDAQ:SBNY)on its \"exceptional balance sheet growth at a highly attractive valuation.\"</p>\n<p><b>Trust banks:</b>Ken Usdin has raised EPS estimates for all three trust banks as he expects fees to rise on increased fees, though he sees net interest income softer. Northern Trust(NASDAQ:NTRS)and State Street(NYSE:STT)\"will see greater benefits from the 4%-8% rise in global stock prices. The +5.8% lag from 1Q is also a modest tailwind for asset servicing and asset management fees,\" he writes in a note to clients.</p>\n<p>For that group, he sees higher money-market fee waivers as the biggest negative.</p>\n<p>Here are some EPS consensus estimates by bank:</p>\n<p>Wells Fargo(NYSE:WFC)is expected to return to the black in Q2 with EPS of&nbsp; 92 cents (the average estimate of 15 analysts) vs. a loss of 15 cents per share in the year-ago quarter.</p>\n<p>JPMorgan is expected to earn $3.12 per share, more than double its $1.21 EPS a year earlier, and analysts anticipate Citi to pull in $1.91 EPS vs. 32 cents a year ago.</p>\n<p>Analysts expect Bank of America(NYSE:BAC)to earn 76 cents per share, up from 28 cents earned in Q2 2020.</p>\n<p>For Stat Street, the average analyst estimate is $1.78 per share, up from $1.59 in the year-ago quarter, and Northern Trust is expected to earn $1.69 per share vs. $1.37 a year ago; the EPS consensus for Bank of New York Mellon(NYSE:BK)stands at $1.00, up from 91 cents a year ago.</p>\n<p>The average analyst estimate for SIVB of $6.50 is more than double the $3.10 it earned in Q2 2020; for SBNY, the consensus is $3.12, up from $2.23 it earned a year earlier.</p>\n<p>In chart below, Goldman Sachs(NYSE:GS)boasts the largestnet income growth CAGR over the past three yearswhen compared with its peers.</p>\n<p>SA contributor Khaveen Investmentsanalyzes Goldman's robust investment banking growth to value the company.</p>\n<p><img src=\"https://static.tigerbbs.com/6a84e48162c353f84810c32a6264ab5e\" tg-width=\"918\" tg-height=\"368\"></p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Investors to focus on banks' H2 guidance in Q2 earnings report this week</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nInvestors to focus on banks' H2 guidance in Q2 earnings report this week\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-12 14:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/news/3714067-banking-preview><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Expect large cap banks to guide lower on net interest income for the back half of 2021, says Morgan Stanleyanalysts led by Betsy Graseck in the firm's Q2 preview for big banks.\nShe sees loan shrinkage...</p>\n\n<a href=\"https://seekingalpha.com/news/3714067-banking-preview\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"JPM":"摩根大通","MS":"摩根士丹利","WFC":"富国银行","GS":"高盛","STT":"道富银行","BAC":"美国银行","C":"花旗"},"source_url":"https://seekingalpha.com/news/3714067-banking-preview","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1191603476","content_text":"Expect large cap banks to guide lower on net interest income for the back half of 2021, says Morgan Stanleyanalysts led by Betsy Graseck in the firm's Q2 preview for big banks.\nShe sees loan shrinkage rate bottoming in Q2 and Fed tapering talk in Q3 lifting long-end rates.\nTrading revenue, though still strong vs. Q2 2019 levels, will fall from Q2 2020 levels. Graseck sees Q2 2021 capital markets revenue (including trading and investment banking division) will be down 20% Y/Y.\nRecall that in June, Citigroup(NYSE:C)CEO Mark Mason warned that Q2trading revenue is likely to fall ~30%from year ago and JPMorgan Chase(NYSE:JPM)CEO Jamie Dimonexpects Q2trading revenue higher than $6B, which infers a ~38% drop from the year-ago quarter.\nMorgan Stanley's(NYSE:MS)James Gormanalso anticipatesa more \"normalized\" quarter after unusually strong Q4 2020 and Q1 2021 results. \"Net-net the quarter's going to be good,\" he said at a conference in June.\nReserve releases are seen continuing in Q2, which have helped bolster earnings the past few quarters, after banks set aside massive piles of cash in Q1 2020 to prepare for uncertainty amid the pandemic. But Morgan Stanley's Graseck also sees net charge-offs improving in Q2 2021 due to higher consumer savings rates, falling jobless claims, and rising wages.\nSeeanalysts' EPS revisions on JPM's quarterly earningsover the past two years in chart below.\n\nMidcap banks: Morgan Stanley analyst Ken Zerbe expects most banks to beat consensus EPS in the quarter, helped by lower provision expense. Strong deposit growth and low net charge-offs will provide bright spots.\n\"Fundamentally, we have fairly modest expectations\" for Q2, with the biggest headwind being the lack of loan growth. \"In fact, we are cutting our loan growth estimates by 20 bps in 2Q21 given both weak industry growth and cautious management commentary,\" Zerbe writes in a note to clients.\nBecause of that, investors will be watching on managements' outlook for H2 2021.\nHe expects SVB Financial(NASDAQ:SIVB)to benefit from stronger investment gains and Leerink revenue and likes Signature Bank(NASDAQ:SBNY)on its \"exceptional balance sheet growth at a highly attractive valuation.\"\nTrust banks:Ken Usdin has raised EPS estimates for all three trust banks as he expects fees to rise on increased fees, though he sees net interest income softer. Northern Trust(NASDAQ:NTRS)and State Street(NYSE:STT)\"will see greater benefits from the 4%-8% rise in global stock prices. The +5.8% lag from 1Q is also a modest tailwind for asset servicing and asset management fees,\" he writes in a note to clients.\nFor that group, he sees higher money-market fee waivers as the biggest negative.\nHere are some EPS consensus estimates by bank:\nWells Fargo(NYSE:WFC)is expected to return to the black in Q2 with EPS of  92 cents (the average estimate of 15 analysts) vs. a loss of 15 cents per share in the year-ago quarter.\nJPMorgan is expected to earn $3.12 per share, more than double its $1.21 EPS a year earlier, and analysts anticipate Citi to pull in $1.91 EPS vs. 32 cents a year ago.\nAnalysts expect Bank of America(NYSE:BAC)to earn 76 cents per share, up from 28 cents earned in Q2 2020.\nFor Stat Street, the average analyst estimate is $1.78 per share, up from $1.59 in the year-ago quarter, and Northern Trust is expected to earn $1.69 per share vs. $1.37 a year ago; the EPS consensus for Bank of New York Mellon(NYSE:BK)stands at $1.00, up from 91 cents a year ago.\nThe average analyst estimate for SIVB of $6.50 is more than double the $3.10 it earned in Q2 2020; for SBNY, the consensus is $3.12, up from $2.23 it earned a year earlier.\nIn chart below, Goldman Sachs(NYSE:GS)boasts the largestnet income growth CAGR over the past three yearswhen compared with its peers.\nSA contributor Khaveen Investmentsanalyzes Goldman's robust investment banking growth to value the company.","news_type":1},"isVote":1,"tweetType":1,"viewCount":239,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}