Fri, Jul. 15, 11:45 AM
- Speaking on the earnings call, CEO John Stumpf says Brexit should have a much lower impact on Wells Fargo (WFC -2.8%) compared to its more internationally-exposed peers. On the other hand, all lenders have to swim in the same lower-for-longer interest rates pool.
- WSJ blog
- To that end, Wells, says Stumpf, in Q2 was a big buyer of MBS and other securities in order to churn out a slightly better return on excess deposits.
- Low rates did help the mortgage business in Q2, says Stumpf, and a full pipeline likely means a good Q3.
- One of the largest lenders to the energy sector, the bank didn't build oil and gas reserves for the first time in the past six quarters in Q2.
- Buy the dip, says Citi's Keith Horowitz, who pegs core earnings at a disappointing $0.96 per share vs. the $1.01 reported. Part of his buy thesis is an expectation Wells will close the gap between core and reported EPS. "We see good value here and would look to establish or add to positions on any weakness."
Fri, Jul. 15, 8:54 AM
- Q2 net income of $5.6B or $1.01 per share vs. $5.7B and $1.03 a year ago.
- Net charge-offs of $924M vs. $274M a year ago. Net charge-offs as a percent of total loans of 0.39% vs. 0.30%. Reserve build of $150M (mostly from loan growth) vs. a release of $350M.
- ROA of 1.2% down 13 bps Y/Y. ROE of 11.7% down 101 bps. ROTCE of 14.15% down 117 bps.
- NIM of 2.86% down four basis points from Q1. Mortgage banking noninterest income of $1.4B down $184M from Q1.
- CET 1 ratio of 10.6% flat from Q1. 44.8M shares bought back during quarter.
- CC at 10 ET
- Previously: Wells Fargo EPS and revenue in-line (July 15)
- WFC -1% premarket
Thu, Jul. 14, 8:19 AM
- Among the items boosting the quarter was a big rebound in markets revenue (which includes FICC) - up 23% Y/Y to $5.56B. The bank had previously unofficially guided to more than a 10% gain in trading revenue.
- Jamie Dimon has previously said that the myriad legal and regulatory issues pressuring the bank were beginning to dissipate, and this quarter JPMorgan reported a legal benefit of $430M vs. $291M of expenses a year ago.
- Energy? JPMorgan's Corporate & Investment bank booked a $235M credit loss vs. $50M a year ago, though $185M of that loss came from one customer. The commercial bank had a reserve release of $25M vs. needing to add $304M in Q1.
- Citigroup (NYSE:C) +2.6%, Bank of America (NYSE:BAC) +2.1%, Goldman Sachs (NYSE:GS) +2.25%, Morgan Stanley (NYSE:MS) +1.8%, Wells Fargo (NYSE:WFC) +1.4% premarket
Tue, Jun. 14, 3:48 PM
- The S&P 500 is down just 0.25%, but the financial sector (XLF -1.5%) is taking a far larger beating as the idea of higher interest rates fades, with German 10-year yields falling below zero, and the U.S. 10-year Treasury yield within sight of its all-time low. KBE -2.3%, KRE -2.3%
- The FOMC concludes its two-day policy meeting tomorrow, at which updated economic projections and dots will be unveiled, along with a Janet Yellen press conference.
- How much of the panic into fixed-income is due to concern about the U.K. exiting the EU will become evident next Thursday night as that country's Brexit votes are tallied.
- Bank of America (BAC -2.5%), Citigroup (C -3.1%), Wells Fargo (WFC -2.5%), Regions Financial (RF -2.9%), KeyCorp (KEY -3.7%), PNC Financial (PNC -2.4%), Fifth Third (FITB -2.6%), SunTrust (STI -2.8%), E*Trade (ETFC -2.6%), MetLife (MET -1.6%), Prudential (PRU -1.8%), BNY Mellon (BK -2%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IYG, FNCL, SEF, FXO, RYF, FINU, RWW, XLFS, FINZ, JHMF, FAZZ, FNCF
Wed, May 18, 1:08 PM
- The meme of rates lower for longer has been stood on its head in the last 24 hours thanks to some decent economic data, but also surprisingly hawkish Fedspeak yesterday.
- The fixed-income world now believes remarks from the Fed's Williams and Lockhart yesterday may have been a preview of what we'll get when the real power speaks tomorrow - Fischer and Dudley - and then on May 27, when Janet Yellen gives a speech.
- Up at 2 ET are the minutes from the FOMC's April meeting.
- The 10-year yield is higher by five basis points to 1.82% and short-term rate markets have upped expectations for a Fed move this year.
- XLF +1.85%, KBE +3.15%, KRE +3.3%
- Bank of America (BAC +3.7%), Citigroup (C +4.2%), JPMorgan (JPM +3.2%), Wells Fargo (WFC +2.1%), U.S. Bancorp (USB +2.1%), Regions (RF +3.3%), KeyCorp (KEY +3.7%), PNC Financial (PNC +2.7%), Fifth Third (FITB +3.7%), Capital One (COF +1.9%), E*Trade (ETFC +4.4%), Schwab (SCHW +4.8%), MetLife (MET +2.9%), Prudential (PRU +3.4%), Lincoln National (LNC +4.2%), BNY Mellon (BK +2.3%), Northern Trust (NTRS +2.9%)
Fri, Apr. 15, 10:16 AM
- All of a sudden, it's the "Too Big To Fail" class favorite that's under the gun.
- First, there have been a number of articles suggesting Wells Fargo (NYSE:WFC) as the big lender playing loosest and fastest in the now-crashed energy patch. Then it was D.C. regulators who lumped Wells Fargo in with the usual suspects as they rejected nearly all of the country's biggest lenders' living wills. Third, bank earnings season is underway, and while JPMorgan, Bank of America, and Citigroup partied after their somewhat lame but better-than-hoped results, Wells Fargo has sold off a bit following its report.
- Piper Jaffray has seen enough and today downgrades to Underweight from Neutral. It's the bank's 2nd downgrade this week. Wells is lower by 1.25% today and 12.1% Y/Y - better than Citi's 14% decline, but worse than Bank of America's 10% loss and JPMorgan's 3% fall.
- Now read: Wells Fargo: Some Problems, Finally? (April 15)
Wed, Apr. 13, 11:31 AM
- JPMorgan's revenues and profits both fell from a year ago, but the lame performance of the banks thus far this year has already priced in a weak quarter. JPMorgan is higher by 3.8%, with Citigroup (C +4.7%), Bank of America (BAC +3.5%), Wells Fargo (WFC +1.7%), Goldman Sachs (GS +2.9%), and Morgan Stanley (MS +4.4%) joining the party. The XLF is higher by 1.75% vs. the S&P 500's 0.7% advance.
- But what about all of these players (except for Citi) having their living wills rejected by the Fed, FDIC, or both? A sideshow, no doubt. Regulators are going to regulate - like the commercial goes, "It's what they do." Banks will tweak plans, numbers, or whatever they need to in order to get D.C. to eventually sign off.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IAI, IYG, FNCL, SEF, FXO, RYF, KCE, FINU, RWW, XLFS, FINZ, FAZZ
Tue, Mar. 29, 2:49 PM
- Not joining the broad market rally following Janet Yellen's caution on the pace of rate hikes are the financials (XLF -0.2%), where any earnings growth will depend, in part, on higher interest rates.
- The S&P 500 is higher by 0.85% and Nasdaq by 1.7%, but Bank of America (BAC -2.2%), Citigroup (C -1%), Wells Fargo (WFC -1.5%), Regions Financial (RF -2.1%), KeyCorp (KEY -1.8%), Fifth Third (FITB -2.1%), MetLife (MET -1.2%), and Prudential (PRU -0.8%) are among those under pressure.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IYG, SEF, FNCL, FXO, RYF, FINU, RWW, FINZ, XLFS
- Previously: Stocks and gold turn higher, yields and dollar lower, on Yellen remarks (March 29)
- Previously: Yellen signals caution on rate hikes (March 29)
Thu, Mar. 24, 10:50 AM
- "We see risks to Wells Fargo's (WFC -2.4%) revenue growth and credit performance," says UBS. "Coupled with a valuation on the high end of peers and consensus estimates that have not come down much, [this] puts Wells Fargo shares at risk of under performance in our view."
- The bank has a strong management team and franchise, acknowledges UBS, but this isn't news and is priced into the stock.
- Though down sharply on the session, Wells isn't doing any worse than the rest of the major U.S. banks.
Wed, Mar. 16, 2:28 PM
- Rallying hard for the last few weeks alongside the markets and hope for a faster pace of rate hikes, the financials (XLF -0.4%) are the worst-performing sector in the minutes after the FOMC's dovish statement and economic/rate projections.
- Bank of America (BAC -2.6%), Morgan Stanley (MS -1.9%), Wells Fargo (WFC -0.9%), Citigroup (C -1.4%), Regions (RF -1.7%), PNC (PNC -1.2%), Fifth Third (FITB -1.9%), Schwab (SCHW -2.5%), MetLife (MET -0.4%)
- Previously: Stocks, bonds, gold gain, dollar slides, following Fed (March 16)
- Previously: Fed bows to markets (March 16)
- Previously: Fed stays on hold, sees just two rate hikes this year (March 16)
Tue, Feb. 23, 2:38 PM
- Holding its investor day today, JPMorgan said it was going to add another $500M to energy-related loan-loss reserves. This followed a $67M provision in Q4, which at the time brought total oil and gas loss reserves to $815M (vs. a portfolio with book value of $44B).
- In addition, the bank said it could need to add another $1.5B to reserves should oil hang around $25 per barrel over the next 18 months. For perspective, prior to Q4, JPMorgan hadn't had to add to reserves for six years - in fact reserve releases were a big boost to profits across the industry.
- "When the biggest bank increases reserves for potential oil losses it sets a tone for the industry,” says Mike Mayo.
- Separately, the FDIC says bad loan provisions across the banking sector were $3.8B higher in Q4 than a year earlier.
- JPMorgan (JPM -3.5%), Citigroup (C -2.9%), Bank of America (BAC -2.9%), Wells Fargo (WFC -2%), U.S. Bancorp (USB -3%), Regions Financial (RF -3.8%), Comerica (CMA -4.2%), Zions (ZION -4.1%), PNC Financial (PNC -2%).
- ETFs: KRE, KBE, IAT, KBWB, QABA, KBWR, KRU, KRS
Thu, Feb. 11, 2:37 PM
- Oil's lower by 3.3% today, but it's the financial sector (XLE -3.1%) again leading the S&P 500's 2.15% decline.
- For the year, the XLF is down by 17.9%, easily outpacing on the downside energy (down 13%) and the S&P 500 (down 11%).
- With the 10-year yield plunging all the way to 1.6% and short-term rates markets now beginning to price in Fed rate cuts this year, the banks are being hit particularly hard: Bank of America (BAC -8.1%), Citigroup (C -7.6%), JPMorgan (JPM -5.1%), Wells Fargo (WFC -2.9%), Goldman Sachs (GS -5.4%).
- Leading regionals (KRE -4.4%) lower are KeyCorp (KEY -5.9%), Huntington Bancshares (HBAN -4.9%), Fifth Third (FITB -5.4%), and PNC Financial (PNC -4.4%).
- ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
- Previously: Lots of negative rate talk at Yellen hearing (Feb. 11)
- Previously: Insurers punished as rates plunge (Feb. 11)
Mon, Feb. 8, 2:24 PM
- It is the European banks and contagion concerns that are freaking out the markets today - not just the Fed, China and crude oil - according to David Rosenberg, noting that some of the European banks are trading at 2008 crisis levels after the group has tumbled 18% YTD vs. 11% for the STOXX 600 index.
- European financial firms are taking a beating amid fears of "a chronic profitability crisis that makes it impossible for banks to build up barely-adequate capital bases," WSJ reports.
- Deutsche Bank (DB -9.8%) is down another ~10%, bringing its YTD loss to nearly 40% while its valuation has fallen to ~30% of book value, and its credit default swaps spiked to their highest levels since 2012.
- News of major withdrawals out of Credit Suisse (CS -4.2%) caused its shares to sink 11% last week, hitting a 24-year low, and Santander (SAN -6.2%), BBVA (BBVA -5.4%), and UniCredit (OTCPK:UNCFF -5.5%) are down to lows seen during the last eurozone financial crisis.
- "Oil and the flatter yield curve alone do not explain the 12% plunge we have seen in S&P Financials so far this year," Rosenberg says, adding that BofA (BAC -6.1%), Citigroup (C -6.2%) and Wells Fargo (WFC -3.5%) all briefly touched 52-week lows last week - "an ominous signpost."
- ETFs: XLF, FAS, FAZ, UYG, VFH, PSP, IYF, EUFN, BTO, IPF, IAI, IYG, SEF, FNCL, FXO, PFI, IXG, PEX, RYF, FINU, KCE, RWW, KBWC
- Earlier: Markets extend two-day rout; gold gets 3% boost
Wed, Feb. 3, 10:25 AM
- This just in: The financial sector is having a worse go it this year than energy, with the XLF lower by 13.6% YTD vs. the XLE's 9% decline.
- Leading a big reversal from this morning higher open is the XLF's 2% decline. The S&P 500 is now off 1%, and the XLE "just" 0.85%.
- Among the issues for the financials are two items: 1) Hopes for a sustained rate hike cycle have been dashed, with the 10-year yield tumbling all the way to 1.82% currently from about 2.30% when the Fed hiked in mid-December. Fed speakers are all-of-a-sudden sounding very dovish (Dudley is the latest), and short-term rate futures are now pricing in just a 50% chance of even one Fed rate increase this year; 2) For lenders specifically, there's worry over their exposure to the crashing energy sector. No doubt better capitalized today than 10 years ago, losses are still losses even if they don't threaten the viability of the bank.
- JPMorgan (JPM -2.6%), Wells Fargo (WFC -3.6%), Morgan Stanley (MS -3.5%), KeyCorp (KEY -3.1%), PNC Financial (PNC -2%), Comerica (CMA -2.7%), Schwab (SCHW -3.8%), MetLife (MET -2.5%)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, PSCF, FINZ, KRS, XLFS
Fri, Jan. 15, 8:29 AM
- Q4 net income of $5.71B or $1.03 per share vs. $5.71B and $1.02 a year ago.
- ROA of 1.27% down 9 basis points Y/Y; ROE of 12.23% down 61 bps. Efficiency ratio of 57.4% improves from 59%. Net interest margin of 2.92% down four basis points from last quarter, down 12 basis points from a year ago.
- Net charge-offs as a percent of average loans of 0.36% up from 0.34%. Credit losses in Q4 of $831M up from $703M in Q3 mostly thanks to $90M in higher energy portfolio losses.
- Conference call at 10 ET
- Previously: Wells Fargo beats by $0.01, misses on revenue (Jan. 15)
- WFC -2.25% premarket amid a big slump in equity index futures.
Tue, Jan. 12, 12:16 PM
- Wells Fargo (WFC +1.4%) is rarely cheap enough to buy, says KBW's Chris Mutascio, but a 6% slide over the past month gives investors just that chance.
- The bank has a premium valuation, but it's warranted thanks to a projected 2016 ROA of 1.32% vs. peers at just 1%. Only U.S. Bancorp is expected to perform better on this metric, and it trades a premium to even Wells Fargo.
- Mutascio also takes note of the bank's leverage to rising rates and potential upside to estimates thanks to the pending purchases of GE Capital assets.
- He upgrades to Outperform with $60 price target.
Wells Fargo & Co. is a nationwide, diversified, community-based financial services and bank holding company. It provides banking, insurance, investments, mortgage, and consumer and commercial finance through its stores, ATMs, the Internet, and other distribution channels across North America and... More
Industry: Money Center Banks
Country: United States