Tue, Mar. 10, 10:39 AM
- "Slowing earnings growth, deterioration in the quality of earnings, loan growth largely limited to low-yielding assets, continuing NIM pressure, loss absorbing capital issuance, and rising loan loss provision costs are some of the headwinds," says SocGen's Murali Gopal, downgrading Wells Fargo (WFC -1.9%) to Sell from Neutral.
- The stock owes much of its recent move higher to expanding multiples, but Gopal sees little hope for further advance on that front.
- "With the stock’s performance likely to be a function of earnings growth, and consensus forecasting 3% EPS growth in FY15, we recommend investors Sell the stock at current levels," says Gopal, who remains positive on the TBTFs in general, and suggests investors instead buy Bank of America (BAC -1.8%) and JPMorgan (JPM -1.7%).
Thu, Mar. 5, 8:28 PM
- The minimum Tier 1 common capital ratio for banks is 5%, according to the Fed, and here's how the 31 lenders stacked up under the central bank's severely adverse scenario vs. a year ago (h/t: WSJ):
- Deutshce Bank (NYSE:DB): 34.7%, not tested a year ago
- DIscover (NYSE:DFS): 13.9% vs. 13.2% a year ago
- Bank of New York Mellon (NYSE:BK): 12.6% vs. 13.1%
- American Express (NYSE:AXP): 12.5% vs. 12.1%
- Northern Trust (NASDAQ:NTRS): 12.3% vs. 11.7%
- State Street (NYSE:STT): 11.8% vs. 13.3%
- Citizens Financial (NYSE:CFG): 10.7% vs. 10.7%
- KeyCorp (NYSE:KEY): 9.9% vs. 9.2%
- Capital One (NYSE:COF): 9.5% vs. 7.8%
- PNC Financial (NYSE:PNC): 9.5% vs. 9%
- Santander Holdings USA (SAN's U.S. unit): 9.4% vs. 7.3%; shares +0.8% after hours
- BMO Financial (BMO's U.S. unit): 9% vs. 7.6%
- Comerica (NYSE:CMA): 9% vs. 8.6%
- Huntington Bancshares (NASDAQ:HBAN): 9% vs. 7.4%
- HSBC North America (NYSE:HSBC): 8.9% vs. 6.6%
- U.S. Bancorp (NYSE:USB): 8.5% vs. 8.2%
- Regions Financial (NYSE:RF): 8.3% vs. 8.9%
- Citigroup (NYSE:C): 8.2% vs. 7.2%
- SunTrust (NYSE:STI): 8.2% vs. 8.8%
- BB&T (NYSE:BBT): 8.1% vs. 8.4%
- MUFG Americas Holdings (NYSE:MTU): 8% vs. 8.1%
- Ally Financial (NYSE:ALLY): 7.9% vs. 6.3%
- Fifth Third Bancorp (NASDAQ:FITB): 7.9% vs. 8.4%
- Wells Fargo (NYSE:WFC): 7.5% vs. 8.2%
- M&T Bank (NYSE:MTB): 7.3% vs. 6.2%
- Bank of America (NYSE:BAC): 7.1% vs. 5.9%; shares +2.1% after hours
- JPMorgan (NYSE:JPM): 6.5% vs. 6.3%
- BBVA Compass (NYSE:BBVA): 6.3% vs. 8.5%
- Goldman Sachs (NYSE:GS): 6.3% vs. 6.9%
- Morgan Stanley (NYSE:MS): 6.2% vs. 6.1%
- Zions Bancorp (NASDAQ:ZION): 5.1% vs. 3.6%; shares -1.7% after hours
- The lenders were also informed today whether their capital return plans would put them below the Fed's 5% threshold, giving them a 6-day window with which to change those requests, if need be. Last year, both BofA and Goldman scaled back their dividend/buyback requests, allowing them to pass the CCAR. This year's CCAR results will be announced on Wednesday.
- 2015 Stress Test Methodology and Results
Mon, Mar. 2, 8:30 AM
- One of this country's largest participants in the bubbly subprime auto lending market, Wells Fargo (NYSE:WFC), reports the NYT, for the first time is imposing a cap on the amount of subprime loans it will offer - no more than 10% of overall auto loan originations, which last year was about $30B.
- The move could have big effect as Wells Fargo - having sidestepped the worst of the mortgage mess - has earned a reputation for knowing something about managing risk.
- The cap is already being felt across the auto market, and dealers are noting the bank increasingly rejecting loans which previously might have been accepted.
- Capital One (NYSE:COF), Santander Consumer (NYSE:SC), Ally Financial (NYSE:ALLY) ... ball's in your court now.
- Previously: Ally mulling return to mortgages, credit cards (Feb. 20)
Wed, Feb. 18, 2:49 PM
- The financial sector had begun to turn around a dismal start to the year as February brought forth a string of hawkish Fed heads suggesting a June rate hike, but the XLF is lower by 0.8% after just-released FOMC minutes suggest markets and the hawks are getting ahead of themselves. KBE -1.7%, KRE -2%
- The TBTFs: BofA (BAC -2.2%), JPMorgan (JPM -1.4%), Wells Fargo (WFC -1.6%), Ciitgroup (C -0.8%)
- The regionals: Regions Financial (RF -1.6%), KeyCorp (KEY -1.6%), PNC Financial (PNC -1.3%), BB&T (BBT -1.5%), Fifth Third (FITB -1.6%), SunTrust (STI -1.7%), First Niagara (FNFG -2.1%), M&T (MTB -1.9%), U.S. Bancorp (USB -1.3%), First Horizon (FHN -2.7%).
- Online brokerage: Schwab (SCHW -2.3%), E*Trade (ETFC -1.7%), Ameritrade (AMTD -1.1%), Interactive Brokers (IBKR -0.9%).
- Previously: FOMC minutes: June rate hike not a slam dunk yet (Feb. 18)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, QABA, FINU, KCE, KRU, RWW, KBWR, RYF, KBWC, FINZ, KRS
Fri, Feb. 13, 1:05 PM
- Banks are getting the worse end of the deal in co-branding partnerships with major retailers, say banking officials.
- Margins have shrunk on co-branded programs for major card issuers and processors such as Capital One (NYSE:COF), Wells Fargo (NYSE:WFC), American Express (NYSE:AXP), Visa (NYSE:V), and MasterCard (NYSE:MA) with retailers playing banks off against one another in order to score better terms.
- Earlier this week, American Express announced it would end its co-branded card with Costco.
Tue, Jan. 27, 5:15 PM
Thu, Jan. 15, 11:18 AM
- Wells Fargo (WFC -0.9%) opens a new commercial banking office in New York City to get a bigger piece of the city's near-$100B apparel business. The middle-market lending initiative is spearheaded by Joe Pollicino, the bank's commercial banking chief in New York, a 33-year industry veteran.
- “Over the past five years, more apparel companies are turning to factoring and asset-based lending to leverage extra cash flow during their cyclical business cycles,” says Wells Fargo Capital Finance EVP Kevin Gillespie.
- Source: Press Release
Wed, Jan. 14, 10:38 AM
- "Virtually all of [the bank's 70M customers] know how to fill a gas tank," says Wells Fargo (WFC -1.1%) CEO John Stumpf on the bank's earnings call, and he thus believes the dive in prices is a great opportunity for the economy and the bank. The WSJ's Emily Glazer notes Stumpf avoids the question on how the stumble in energy might impact the Wells' investment banking operation.
- Webcast and Q4 supplement
- Like Jamie Dimon earlier, Wells Fargo management reminds nervous investors that prices fluctuate. Going back just six years, they note, we've had oil at $30, oil at $140, and oil now at $45. Natural gas has both soared and crashed during that time frame as well. The bank abides.
- Previously: Wells Fargo slips after Q4 earnings meet estimates (Jan. 14)
- Previously: Wells Fargo EPS in-line, beats on revenue (Jan. 14)
Wed, Jan. 14, 8:17 AM
- Q4 net income of $5.7B or $1.02 per share vs. $5.6B and $1.00 one year ago.
- Net interest income of $11.2B up $239M from Q3, with net interest margin of 3.04% down two basis points as deposits continue to roll in.
- Community Banking net income of $3.435B vs. $3.222B one year ago on revenue of $12.835B vs. $12.254B. Mortgage originations of $44B vs. $48B in Q3. 14.1M active mobile customers up 19% Y/Y.
- Wholesale Banking net income of $1.97B vs. $2.111B a year ago on revenue of $6.054B vs. $5.972B.
- Wealth, Brokerage and Retirement net income of $514M vs. $491M a year ago on revenue of $3.647B vs. $3.438B. Retail brokerage client assets of $1.4T up 4% Y/Y. Wealth management client assets of $225B up 5%.
- Conference call at 10 ET
- Previously: Wells Fargo EPS in-line, beats on revenue (Jan. 14)
- WFC -1.1% premarket
Wed, Jan. 14, 8:08 AM
Tue, Jan. 13, 5:30 PM
Tue, Jan. 13, 3:21 PM
- 2015 has opened much like 2014, with interest rates doing the exact opposite of what most expected, and falling sharply. It's a tough start for bank investors who have been counting on higher interest rates to help boost earnings for a number of years.
- In the meantime, deposits keep rolling in, and the pace of lending growth isn't quick enough to absorb all the money. In 2014, loan balances rose 4.4%, but securities holdings popped 12%, and cash assets jumped 22%.
- The good part of falling yields are unrealized gains on those security portfolios - negative a year ago, they're were in the green by about $15B on Dec. 31. More good news, says Goldman's Richard Ramsden: Valuations. The big banks are priced at about 9.9x estimated 2016 earnings, allowing for some nice upside if and when rates do decide to go higher.
- Reporting Q4 results tomorrow are JPMorgan (JPM) and Wells Fargo (WFC -0.8%), and on Thursday are Bank of America (BAC -1.4%) and Citigroup (C -0.9%).
Mon, Jan. 12, 8:43 AM
- The collapse in oil prices is set to crimp one of the few fast growth areas for banks since the financial crisis - lending to the energy industry. Right now, we're just talking about a slowdown in lending, but Charles Peabody - who saw the losses incurred by Texas banks during the 1980s energy slump - expects the current situation to lead to losses as well.
- "It’s been a hot industry, probably a little too hot,” says Cullen/Frost (NYSE:CFR) CEO Dick Evans, whose bank has a sizable energy business. “But it is not time to panic. We have been in the game a long time. I am comfortable with what we have been doing.”
- The flip side of energy issues might be stronger business for banks elsewhere as consumers find themselves with more money in their pockets after filling up.
- Among the more sizable banks, Scotiabank (NYSE:BNS) leads the way with 34.6% of its investment banking revenue coming from energy companies. Next is RBC (NYSE:RY), with 20.2%, and then Wells Fargo (NYSE:WFC) with 14.9% and Citigroup (NYSE:C) with 11.8%. Others include Barclays (NYSE:BCS) with 10.7%, Credit Suisse (NYSE:CS) with 8.1%, and Bank of America (NYSE:BAC) with 7.4%.
Mon, Jan. 5, 1:25 PM
- "We view Wells Fargo (WFC -2.7%) as a core bank holding, but shares have reached our price target and we believe sentiment is now overwhelmingly positive after leading returns in 2014 (+21%, #1 among the top 50 banks)," says Baird's David George, who earlier downgraded the stock from Outperform to Neutral.
- Put the money in another bank? Not so quick, says George, suggesting the Fed could tighten later and be less aggressive than most expect, disappointing those hoping for higher rates to boost profits. Other than Wells Fargo, George sees sentiment highest in PNC Financial (PNC -2.7%), SunTrust (STI -3.9%), and U.S. Bancorp (USB -2.2%).
- Asset-sensitive names like Comerica (CMA -3.7%) and Zions (ZION -3.4%) lagged in 2014, but estimates still look to high.
- Top ideas would be Fifth Third (FITB -2.7%), Capital One (COF -2.4%), and JPMorgan (JPM -3%), but George is having a tough time finding value in the sector.
- Previously: Longtime Wells Fargo bull rings the register (Jan. 5)
Mon, Jan. 5, 1:03 PM
- An improving economy and easing of the regulatory burden will be keys for a big move higher in the big banks this year, says Barclays' Jason Goldberg, seeing double-digit percentage gains for the Citigroup (C -2.9%), Bank of America (BAC -3%), JPMorgan (JPM -2.8%), and Wells Fargo (WFC -2.6%).
- His top pick among the group is Citigroup, where the $65 price target suggests upside of more than 20%.
- Goldman has a different take, and sees the regulatory burden as making JPMorgan worth more broken up than together.
Mon, Jan. 5, 9:59 AM
Wells Fargo & Co is a diversified financial services company. It provides retail, corporate and commercial banking services through banking stores and offices, the internet and other distribution channels to individuals, businesses and institutions.
Other News & PR