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Thu, Jan. 14, 8:20 AM
- The fourth quarter looks like it marked the time when credit costs stopped being a tailwind and began becoming a headwind for the banks, says Hedgeye's Josh Steiner, noting a reserve build of $0.03 per share. Loan loss provisions nearly doubled in the quarter as net charge offs jumped $100M sequentially (mostly related to energy).
- Steiner takes note of speedy loan growth - up 10.6% Y/Y and 3.4% sequentially during Q4 - but scratches his head over wisdom of accelerating lending into the end of the credit cycle.
- As for capital markets, M&A was the only strong area, with advisory revenue up 43% to $622M - a good through for shops like Goldman Sachs (NYSE:GS) and Lazard (NYSE:LAZ). Meanwhile FICC trading revenue fell 3%, equity trading fell 7%, and credit underwriting disappeared. "Flat is the new up in investment bank land," says Steiner's associate Jonathan Casteleyn.
- JPM is higher by 1.95% as the bank gets into its earnings call.
- Previously: JPMorgan higher after earnings beat (Jan. 14)
- Previously: JPMorgan Chase beats by $0.07, beats on revenue (Jan. 14)
Thu, Jan. 14, 7:37 AM
- Consumer & Community Banking net income of $2.4B up 10% Y/Y on revenue of $11.2B up 2%. Noninterest expenses of $6.272B down 2%. Net interest income of $2.6B down 5% as spread compression is only partly offset by higher deposit balances. Mortgage banking net income of $266M down 21%, on revenue of $1.7B down 10%. The bank built $100M of reserves during quarter, including $60M related to oil and gas.
- Corporate & Investment Banking net income of $1.75B up 80% Y/Y thanks to lower legal expenses. Revenue of $7.1B fell 4%. Markets & Investor Services revenue of $4.3B fell 3%.
- Commercial Banking net income of $550M down 21% Y/Y on revenue of $1.76B down 1%.
- Asset Management net income of $507M down 6% Y/Y on revenue of $3.045B down 5%.
- Conference call at 8 ET
- Previously: JPMorgan Chase beats by $0.07, beats on revenue (Jan. 14)
- JPM +1.8% premarket
Thu, Jan. 14, 6:49 AM
Wed, Jan. 13, 5:30 PM
Mon, Jan. 11, 8:56 AM
- Investors may be too pessimistic on banks' ability to meet earnings expectations, says analyst Richard Ramsden, citing tailwinds like higher interest rates, a healthier U.S. consumer, manageable credit headaches, and possibly boosted capital returns.
- Wells Fargo (NYSE:WFC), he says, has the clearest path to meeting 2017 estimates. The bank will be a "liftoff winner," says Ramsden, as its retail, small balance deposit base is likely to see little pricing pressure during the first few Fed rate hikes.
- Wells also faces the least downside this year if oil prices slip, China slows, and rates stay flat. It also has potential upside from its GE Capital purchases.
- He upgrades to Buy with $60 price target. The stock's up 1.2% premarket to $50.16.
- Pulled from Goldman's Buy list is JPMorgan (NYSE:JPM) after a period of outperformance (it's about flat Y/Y after last week's steep slide). The price target is cut to $69 from $75. The stock's off 0.2% to $58.80 premarket.
Mon, Jan. 11, 8:04 AM
- Heading into Q4 earnings season, the team at Macquarie likes the names with diversification and dividends. The challenging environment, they say, means weak results for pure investment bank results.
- On that measure, the team likes JPMorgan (NYSE:JPM) as one of the highest risk/reward opportunities. They expect the lender to generate operating leverage this year on lower expenses combined with stronger than peer group growth.
- In a pair trade, they favor UBS over Morgan Stanley (NYSE:MS) because of the former's higher exposure to FICC (Morgan Stanley slashed FICC exposure late last year).
- They're especially cautious on "pure" investment bank names, especially Credit Suisse (NYSE:CS).
Wed, Jan. 6, 10:20 AM
- JPMorgan (NYSE:JPM) Q4 results (due Jan. 14 at 6:45 AM ET) will be released on the bank's website along with a tweet containing a link to the post.
- Source: Press Release
- Goldman Sachs began releasing earnings via its website last quarter, and General Electric began doing so a year ago (a number of other companies do so as well).
Dec. 28, 2015, 4:34 PM
- Two weeks after the Fed delivered its (expected) 0.25% rate hike, the WSJ reports JPMorgan (NYSE:JPM) will up the deposit rates it provides some of its biggest clients.
- The move will make JPM one of the first major U.S. banks to change its rates post-FOMC. With low rates having squeezed net interest margins for some time, many peers have been hoping to pocket the higher rates charged on account of the Fed's move.
- Bank of America, Wells Fargo, and Citi reps have said there has been no change to their companies' deposit rates. However, major Canadian banks (increasingly looking to grow their U.S. business) have upped deposit rates for U.S. dollar-denominated corporate accounts.
Dec. 21, 2015, 11:55 AM
- Investors charged the bank with providing false and misleading information hiding the nature of trades, resulting in tens of millions of dollars of losses.
- To review, JPMorgan (JPM +0.8%) in 2012 booked a $6.2B loss on trades made by Bruno Iksil - the "London Whale" - in its Chief Investment Office unit.
- The news caused a short, sharp fall - otherwise known as a buying opportunity - in the bank's stock price. It's doubled since.
Dec. 18, 2015, 2:21 PM
- The bank failed to disclose numerous conflicts of interest to clients as it put their money into its own more expensive investment products and third-party-managed products which made payments to the banks.
- JPMorgan (JPM -1.8%) admitted improprieties, but says any omissions in disclosures were unintentional.
- Totaling up the SEC settlement with a parallel charge by the CFTC, the bank will pay more than $300M in penalties and disgorgements.
Dec. 17, 2015, 1:02 PM
- JPMorgan (JPM -1.8%) will "aggressively pursue the innovative technologies that we have been making investments in,” says investment bank head Daniel Pinto in a year-end memo to employees. “Internal working groups have made significant advances this year and will be provided even more freedom to develop market leading platforms in 2016.”
- Looking to both cut expense and fend off tech upstarts, the country's largest banks are spending plenty on new technologies like the Blockchain. A McKinsey report earlier this year says those investment banks successfully automating trading and other tasks can boost their profit by 30%.
- The Bank of Dimon spends about 8-9% of annual revenue on technology, according to COO Matt Zames.
Dec. 16, 2015, 3:04 PM
- Wells Fargo's quick post-FOMC boost in its prime rate while leaving the deposit rate unchanged makes clear why bank bulls have been banking on a higher Fed Funds rate - higher net interest margins.
- U.S. Bancorp (USB +1.3%) has quickly followed suit.
- Owing to the glut of deposits, it could be several quarters before lenders begin raising rates for savers, reminds CNBC's Kayla Tausche.
- The XLF is higher by 1.5%.
- Individual names: Bank of America (BAC +1.6%), JPMorgan (JPM +2%), PNC Financial (PNC +2.1%), First Niagara (FNFG +2.1%), Regions Financial (RF +1.2%), Schwab (SCHW +1.5%), MetLife (MET +2.1%), Prudential (PRU +1%).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, FINZ, KRS, XLFS
- Previously: Fed officially puts an end to ZIRP (Dec. 16)
- Previously: Yellen: Factors holding down inflation to fade (Dec. 16)
Dec. 16, 2015, 12:18 PM
- Actively-managed U.S. equity funds saw their sixth-worst monthly outflow in November since Morningstar began tracking the data in 1993. In total, $19.7B was pulled from equity mutual funds last month, bringing the year's total to $163B. ETFs saw inflows of $13B, meaning net equity outflows of $6.7B.
- Still a hot sector is international equity, which saw net inflows of $4.9B - active fund outflows of $4.2B and passive inflows of $9.2B. For the year, international equity has seen inflows of $208B, while U.S. equity outflows are $56B.
- Among the mutual fund companies continuing to see outflows are Pimco (OTCQX:AZSEY +0.6%), Franklin (BEN -0.3%), Fidelity, and JPMorgan (JPM +0.4%). On the ETF side, BlackRock (BLK -1.2%) and Vanguard took in $27.2B between them.
- Other interested parties: WisdomTree (WETF -0.4%), Invesco (IVZ), Legg Mason (LM +1.1%), Janus (JNS -0.6%), T. Rowe Price (TROW +0.1%), AllinaceBernstein (AB +1.4%), Affiliated Managers (AMG +1.2%), Federated Investors (FII +0.7%), Waddell & Reed (WDR -0.3%).
- Full report
Dec. 14, 2015, 3:32 PM
- The troubles in credit mean investors need to discount those costs against the benefits of higher rates, say David George and team at Baird. In other words, downside risk to 2016/2017 EPS estimates arises not just from net interest margin compression, but also higher loan costs.
- Three picks from the team: Bank of America (NYSE:BAC) at 1.1x tangible book value vs. peers at 1.35x. The $18 price target assumes just 1.05x book given weaker returns on capital and revenue growth visibility. BB&T (NYSE:BBT) trades at 11.5x 2016 estimated EPS - inline with peers, but BB&T's solid pre-provision returns, competitive positioning, and better relative capital deployment opportunities warrant a premium valuation. JPMorgan (NYSE:JPM) is also trading about inline with peers through it too has better relative returns and growth opportunities.
Dec. 10, 2015, 1:12 PM
- Raymond James (NYSE:RJF), Bank of New York Mellon (NYSE:BK), Northern Trust (NASDAQ:NTRS), and Bank of America (NYSE:BAC) are best-positioned in the event of a one-and-done move from the Fed, says Goldman, as they get most the earnings upside from the initial move higher in rates, rather than needing "normalization."
- "Deposit betas" may be a source of underappreciated surprise, says Goldman, which doesn't believe banks will pass along much of the initial 50 basis point hike in rates to customers. Poised to benefit here: JPMorgan (NYSE:JPM), BofA, Wells Fargo (NYSE:WFC), PNC Financial (NYSE:PNC), and E*Trade (NASDAQ:ETFC).
- Finally, clarity on the interest rate picture should allow bank managements to get moving in growing returns, Favored "self-help" stories: AIG, Ally Financial (NYSE:ALLY), Oaktree Capital (NYSE:OAK), Voya Financial (NYSE:VOYA), and Zions Bancorp (NASDAQ:ZION).
Dec. 8, 2015, 4:33 PM
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