下面是小编为大家整理的美国大型银行业Q1：信贷未知，取决于复苏或新”常态“【精选推荐】,供大家参考。
Large
Cap
Banks
Post
1Q:
Credit
Unknown,
Depends
On
Recovery
Or New
"Normal",
As
Do
Revenues
Credit
remains
the
key
focal
point
for
large
banks.
Key
unknown
is
shape
of
the recovery
because
of
uncertainty
about
what
the
new
“normal”
will
be,
and
also because fiscal policy is being muddied by the election and other politics. This makes projections for 2021
revenues
and
credit losses
very
challenging. Near
and
medium term, COVID-19 will impact many revenue and expense lines, including PPP loans, which may benefit regionals more. All our banks had large but varied reserve builds in 1Q, partly due to
varied
economic assumptions. We expect further reserve builds as economic outlook has weakened since 1Q, although there has been some hope in past few days for a slowdown in COVID-19 spread. Credit losses are likely to show up on even more of a lag than seen historically. Capital markets have recently started to open up,
with
credit spreads
recovering some, but
mortgage markets
remain stuck.
Large reserve
builds
and
banks’
comments
in
1Q
confirmed
that
risk
of equity dilution
is very low. In fact, all our banks affirmed dividends, and some are suspending buybacks for longer to keep capital levels strong. Bank stocks have sharply outperformed in the past
week
as
COVID-19
expectations
started
to
shift,
but
they
still
sharply
lag
the market versus mid-February peak. Banks seem attractively valued on P/TBV multiples, but earnings and even pre-provision profit run-rates seem cloudy. Dividend yields are attractive, but payout ratios will be high in 2020 and even in 2021 at some banks. Post 1Q, deposit growth still very strong, but loan trends have weakened. Large Bank deposits rose $179 bil in first half of April, below March growth, but far above growth in all of Feb. However, loan growth has been weak as revolver drawdowns have slowed and credit cards have dropped 7% in past five weeks. See page 6. COVID-19 to hurt many areas
in 2Q:
sharply lower net interest margins (-20bp qoq on avg)
offsetting 1Q
loan growth benefit,
fee waivers,
very weak
payments- related
fees,
lower
but
still
elevated
mortgage
banking
fees,
and
higher
expenses near term. Continued weakness in spending is reflected in both card fees and loans. 1Q results were marked by: 1) modest rise in net interest income; 2) strong trading and mortgage banking offsetting weakness in most other non-interest income areas; 3) controlled expense growth; 4) large reserve builds but modest softening of credit. Reserves/loans rose to 1.89% from 1.23% – we expect this to rise to 2.14% by YE ’20.
Regional
banks
gave
more
details
on
exposures
to
at-risk
industries
(e.g., leisure, transportation, retail, energy), but G-SIBs did not provide much new info. Capital markets
have started
to open. High yield spreads are down 277bp from peak but remain 454bp above 2019 lows. As a result, high yield and equity issuance is
up. However, M&A remains very weak,
and therefore loan
syndications remain low. Volatility is declining, which will temper trading revenues versus a strong 1Q. Large bank stocks recovered sharply and outperformed in past week, up 16% on avg, as valuations became attractive. Large banks still lag S&P 500 by 17% since Feb ’20 peak, due to rate cuts and uncertainty about the new normal, which likely includes
higher
unemployment
and
lower
consumer
spending.
Money
centers
and regionals are both trading at 1.1x price/tangible book, below 1.3x and 1.5x long term avg respectively. Near term, bank stocks will likely stay choppy due to the uncertain outlook. We avoid banks more exposed to payments, such as US Bancorp, and those with other constraints, such as Wells Fargo (asset cap, other regulatory issues). We would pick a barbell of some beaten down names with higher reserves, such as Fifth Third, near term, and some high quality names, such as PNC, longer term. North America Equity Research 30
April
2020
Banks
—
Large-Cap Vivek
Juneja
AC
(1-212)
622-6465
vivek.juneja@jpmorgan.com
Bloomberg
JPMA
JUNEJA
<GO>
Jonathan
Summitt
(1-212)
622-6341
jonathan.summitt@jpmorgan.com
Andrew
J
Dietrich
(1-212)
622-4244
aj.dietrich@jpmorgan.com
J.P.
Morgan
Securities
LLC
Also see our recent reports: Revolver Draws Tracker: Growth Up Last Week Due to Two Mega Borrowers; Total at $367 Bil as of 4/24, dated April 27, 2020 Burndown Analysis More Severe Than Stress Tests: No Capital Issuance Needed, dated April 13, 2020
See page 45 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com
Vivek
Juneja
(1-212)
622-6465
vivek.juneja@jpmorgan.com
North
America
Equity
Research
30
April
2020
Equity
Ratings
and
Price
Targets
Company
Ticker
Mkt
Cap ($
mn)
Price
($)
RatiCur
ng
Prev
Cur
Price
Target
End
Prev Date
End Date
Bank
of
America
BAC
US
214,978.60
24.78
OW
n/c
27.00
Dec-20
27.50
n/c
Citigroup
Inc.
C
US
106,254.70
50.26
OW
n/c
56.50
Dec-20
n/c
n/c
Citizens
Financial
Group
CFG
US
9,952.26
23.33
OW
n/c
25.50
Dec-20
27.00
n/c
Fifth
Third
Bancorp
FITB
US
14,005.62
19.69
N
n/c
21.50
Dec-20
n/c
n/c
PNC
Financial
PNC
US
47,725.70
110.99
OW
n/c
112.00
Dec-20
116.50
n/c
Regions
Financial
RF
US
10,775.82
11.26
OW
n/c
12.50
Dec-20
13.00
n/c
Truist
Financial
Corp
TFC
US
52,820.47
39.20
N
n/c
40.50
Dec-20
n/c
n/c
U.S.
Bancorp
USB
US
57,920.76
38.46
UW
n/c
38.50
Dec-20
39.00
n/c
Wells
Fargo
WFC
US
122,892.00
30.00
UW
n/c
32.00
Dec-20
33.50
n/c
Source:
Company
data,
Bloomberg,
J.P.
Morgan
estimates.
n/c
=
no
change.
All
prices
as
of
29
Apr
20.
1Q: Credit, Net Interest Income Key Weakness; Trading, Loan/Deposit Growth Positive
1Q was marked by: 1) 0.9% qoq growth in net interest income on average; 2) mixed net interest margins (NIM); 3) remarkable 7.1% qoq period end loan growth and strong deposit growth; 4) very strong trading and mortgage banking revenues, weak card fees and service charges, and write-downs on private equity investments and bridge loans; 5) controlled 1% yoy expense growth; 6) very sharp jump in provisions but limited weakening in credit metrics this early; and 7) capital ratios down moderately, but still high, and suspension of buybacks. Adjusting EPS estimates to reflect 1Q results, management updates, market trends, round one of PPP loans, and further weakness in credit trends given the worsening outlook. Near term, we expect results to be marked by: 1) mixed net interest income trends as sharp drop in
NIM (due to decline in rates) is offset by impact of very strong loan/deposit growth; 2) weakness in many fee lines, such as card fees and service charges, due to lower spending and fee waivers; 3) continued very high mortgage banking revenues but down from 1Q at some banks; 4) mixed expense trends; and 5) further reserve builds and some weakening in credit quality. Table 1: EPS Estimate Changes $
1Q20
2Q20E
2020E
2021E
New
Old
Chg
New
Old
Chg
New
Old
Chg
BAC
0.40
0.38
0.50
(0.12)
1.74
1.97
(0.23)
2.10
2.30
(0.20)
C
1.05
0.74
1.33
(0.59)
4.01
5.23
(1.22)
5.70
6.28
(0.58)
CFG
0.09
0.31
0.69
(0.38)
1.68
2.16
(0.48)
2.43
2.86
(0.43)
FITB
0.11
0.48
0.48
-
1.80
1.84
(0.04)
2.05
2.23
(0.18)
PNC
1.95
1.54
2.20
(0.66)
7.44
8.83
(1.39)
7.95
9.34
(1.39)
RF
0.15
0.11
0.31
(0.20)
0.80
1.10
(0.30)
1.12
1.29
(0.17)
TFC
0.84
0.75
0.80
(0.05)
3.13
3.30
(0.17)
3.33
3.52
(0.19)
USB
0.72
0.69
0.78
(0.09)
2.83
3.18
(0.35)
2.85
3.11
(0.26)
WFC
0.01
0.43
0.73
(0.30)
1.75
2.29
(0.54)
2.50
2.77
(0.27)
Source:
Company
reports
and
J.P.
Morgan
estimates.
Table 2: EPS to Drop Sharply in ‘20, Partly Rebound in ‘21 at Money Centers … Money
Center
banks,
median
non-FTE
yoy
growth
2018
2019
2020E
2021E
Net
Interest
Income
3%
2%
-6%
-1%
Non-Interest
Income
-3%
-2%
-6%
5%
Revenue
1%
0%
-5%
2%
Expenses
-1%
0%
-2%
-1%
Provisions
-3%
11%
257%
-8%
Pre
Provision
Profit
4%
1%
-16%
6%
Core
Net
Income
13%
3%
-51%
32%
Core
EPS
21%
12%
-47%
41%
Source:
Company
reports
and
J.P.
Morgan
estimates.
Table 3: … And Also at Regional Banks Regional
banks,
median
non-FTE
yoy
growth
2018
2019
2020E
2021E
Net
Interest
Income
6%
2%
4%
-1%
Non-Interest
Income
3%
8%
-8%
3%
Revenue
5%
4%
1%
0%
Expenses
1%
4%
2%
0%
Provisions
-1%
45%
257%
-12%
Pre
Provision
Profit
8%
5%
2%
4%
Core
Net
Income
25%
1%
-38%
8%
Core
EPS
32%
7%
-34%
13%
Source:
Company
reports
and
J.P.
Morgan
estimates.
Excludes
TFC,
STI
due
to
their
merger.
1Q Loan Growth Very High, Led By C&I Drawdowns; Cards Down More Than Seasonally
Period end loans jumped 7.1% qoq in 1Q at our banks on average, led by C&I revolver drawdowns in March, partly offset by declines in credit card loans, which fell a little more than seasonal. Average total loans were up modestly by 1% qoq as much of the period end growth came late in 1Q. Period end loan growth was strongest at PNC at +10.3% qoq, and weakest at Citi at +3.1%, followed by Wells Fargo at +4.9% – Citi is partially due to weaker international demand, and Wells Fargo is partly due to its asset cap, which is now constraining growth. Residential mortgages had driven loan growth in prior quarters, but period end growth slowed in 1Q to +0.3% qoq versus +1.1% qoq in 4Q on average. Looking to 2Q, we expect period end C&I loan growth to slow as our tracker shows revolver draws have fallen in April (see page 5). Additionally, credit card loans have dropped sharply by 7% in the past five weeks per Fed dat...
