美国大型银行业投资策略分析

1、Large Cap BanksPost 4Q: Fed On Hold NIM Stalled; Any C&I Loans To Cap Mkts? Lack Of Catalysts Near TermLooking post 4Q, the key event has been the Feds notable shift to a dovish stance. Large banks outlook will again be driven primarily by share buybacks and controlled expense growth. Net interest i

2、ncome growth will be slowed by lack of rate hikes and flatter yield curve (which impacts long dated assets). Credit quality remains fine no signs of weakness, albeit risk has increased in the system. Near term, we could see some benefit from higher mortgage origination revenues. Payments and credit

3、card business pricing competition remains intense. After a good recovery in the stocks during earnings and change in Fed stance, we move to the sidelines on large banks. Valuations are attractive but no catalyst near term. The Fed could be on hold for an extended period due to mixed trends in variou

4、s metrics. We recommend banks with other drivers Citi (EM, efficiency) and among regional banks, Citizens (further performance improvement) and Regions (improved targets at Investor Day). A prolonged Fed hold period with modest loan growth could spark revival in M&A.Large bank stocks remain attracti

5、vely valued as recession is not imminent. Centers are at 8.9x 20 consensus EPS on average below 8.2x-11.8x long term average, and Regionals are at 9.2x 9.7x-13.2x long term average. Both groups are at or near the low end of relative P/Eranges.Banks with larger share of long dated assets residential

6、mortgages and MBS will be hurt by the sharp 60bp drop in 10 Yr Treasury yield from recent peak. Wells Fargo, Bank America, US Bancorp, Regions, and have a higher share of residential mortgages and MBS at 36%-40% of total loans and securities. These will see much less benefit from repricing uponmatur

7、ity.Will chase for yield be back in vogue? Leveraged loan and high yield spreads reversed a sizable part of last quarters spread widening in early Jan leveraged loan spreads reversed 66bp of 177bp widening, and high yield spreads recovered 86bp of 202bp widening, a positive for loan marks in 1Q for

8、most banks. We continue to watch leveraged loans carefully see our recent note ( HYPERLINK /research/content/GPS-2879734-0 Inst. Leveraged Loans HYPERLINK /research/content/GPS-2879734-0 Bank C&I Loans In 4Q; Lev. Loan Spreads Sharp Reversal; Risk Up A Little, dated 1/11/19). Recent Shared National

9、Credit review by regulators found better credit quality but increased risk in the system overall see note HYPERLINK /research/content/GPS-2894632-0 here.Will part of strong 3.5% qoq PE loan growth in 4Q come back into capital markets? Growth was partly due to turmoil in the capital markets and signi

10、ficantly for M&A financing. We expect slow C&I loan growth in1Q19.Some notables: 1) 1Q NIM outlook flattish at most banks despite day count benefit;2) Citizens 4Q funding costs qoq rose at the same rate as in 3Q, better than other banks where it accelerated; 3) lagged hit in 1Q in some markets relat

11、ed revenues; 4) pricing pressure in payments continues; 5) card business competition remains intense; and 6) Wells continued strong growth in loans to non-depository financials.4Q results were marked by: 1) moderate net interest income growth with rise in net interest margin; 2) acceleration in fund

12、ing cost increases; 3) weak non- interest income, mainly markets related revenues; 4) controlled expense growth, which drove improvement in efficiency ratio; 5) continued strong credit quality; 6) share buybacks. PG&E bankruptcy is a one-off situation see note HYPERLINK /research/content/GPS-2897066

13、-0 here.Investment banking has started off weak due to the shutdown, especially debt and volumes. Issuance has picked up, including high bonds with tightening of spreads. M&A volume has started on a moderatenote.North America Equity Research31 January2019Banks Large-Cap Vivek JunejaAC(1-212) 622-646

14、5 HYPERLINK mailto:vivek.juneja vi HYPERLINK mailto:vek.juneja vek.junejaBloomberg JPMA JUNEJA Jonathan L Summitt(1-212) 622-6341 HYPERLINK mailto:jonathan.l.summitt jonathan.l.summittJ.P. Morgan Securities LLCSee page 39 for analyst certification and important disclosures.J.P. Morgan does and seeks

15、 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. HY

16、PERLINK / Vivek Juneja(1-212) 622-6465 HYPERLINK mailto:vivek.juneja vi HYPERLINK mailto:vek.juneja vek.junejaNorth America Equity Research31 January 2019Equity Ratings and Price TargetsCompanyTickerMkt Cap ($ mn)Price ($) Rat Curing PrevCur Price TEnd Datearget PrevEnd DateBank of AmericaBAC US275,

17、284.6028.47OWn/c31.00Dec-1930.00n/cBB&T CorporationBBT US37,250.3148.80Nn/c50.50Dec-19n/cn/cCitigroup Inc.C US152,673.5064.46OWn/c72.50Dec-19n/cn/cCitizens Financial GroupCFG US15,806.9933.92OWn/c42.50Dec-19n/cn/cFifth Third BancorpFITB US17,342.6426.82Nn/c30.50Dec-19n/cn/cPNC FinancialPNC US56,796.

18、21122.67OWn/c134.00Dec-19135.50n/cRegions FinancialRF US15,549.2515.17OWn/c17.50Dec-19n/cn/cSunTrust Banks, Inc.STI US26,554.0859.42OWn/c66.50Dec-19n/cn/cU.S. BancorpUSB US82,265.2851.16UWn/c51.50Dec-19n/cn/cWells FargoWFC US224,071.4048.91UWn/c54.50Dec-1955.00n/cSource: Company data, Bloomberg, J.P

19、. Morgan estimates. n/c = no change. All prices as of 31 Jan 19.4Q Marked By Strong PE C&I Loan Growth; Buybacks, Controlled Expenses Key To 19earnings were marked by: 1) moderate 1.6% qoq net interest income growth on average; 2) low loan growth on average basis (+1.1% qoq), but pick-up on period e

20、nd basis, led by C&I loans; 3) shift in deposit growth; 4) modest 1bp qoq increase in NIM; 5) weak trends in non-interest income, mainly led by decline in markets-related revenues (investment banking, trading, retail brokerage, asset management); 6) controlled growth in non-interest expenses (+0.7%

21、yoy); 7) continued strong credit quality; and 8) share repurchases. Core efficiency ratios improved on average at our banks led by non-interest expenses, partly driven by the expected end to the FDICsurcharge.WeareadjustingEPSestimatestoreflect4Qresults,guidance,andinterestrates.WehaveremovedtheoneF

22、edratehike previously in our estimates, which had a very modest NIM benefit of about 1bp. These changes were offset by a little better loangrowth,lesserdeclineinnon-interestbearingdeposits,andbetterthanexpected,continuedverylowcreditlosses.Table 1: EPS Estimate Changes$4Q182019E2020ENewOldChgNewOldC

23、hgBAC0.702.802.740.063.103.070.03BBT1.054.344.320.024.644.64-C1.647.507.50-8.558.55-CFG0.983.923.92-4.244.24-FITB0.692.692.660.033.023.02-PNC2.7511.1711.23(0.06)11.9712.10(0.13)RF0.361.551.55-1.701.70-STI1.405.855.85-6.306.30-USB1.104.274.27-4.614.61-WFC1.214.874.95(0.08)5.535.63(0.10)Source: Compan

24、y reports and J.P. Morgan estimates.Table 2: EPS Growth To Be Led By Buybacks at Money CentersMoney Center banks, median non-FTE yoy growth201720182019E2020ENet Interest Income4%5%4%3%Non-Interest Income5%1%-2%2%Revenue3%3%2%3%Expenses-1%-1%0%1%Provisions3%-3%27%17%Pre Provision Profit11%10%4%5%Core

25、 Net Income14%26%1%3%Core EPS19%34%10%12%Source: Company reports and J.P. Morgan estimates.Table 3: Buybacks Also to Drive EPS Growth at RegionalsRegional banks, median non-FTE yoy growth201720182019E2020ENet Interest Income7%6%3%3%Non-Interest Income0%2%2%3%Revenue4%4%3%3%Expenses4%0%0%2%Provisions

26、-11%-4%62%19%Pre Provision Profit8%7%6%5%Core Net Income10%23%1%3%Core EPS12%31%7%8%Source: Company reports and J.P. Morgan estimates.Strong C&I Loan Growth Will Some Of The Growth Go Back Into Capital Markets?Period end loan growth increased in 4Q to 1.7% qoq on average, from 0.5% qoq on average in

27、 3Q. However loan growth of 1.1% qoq in 4Q was close to growth duringPE C&I loan growth was very strong in 4Q, up 3.5% qoq, a very sharp increase from 0.6% qoq in3Q.This C&I loan growth was partly driven by a surge in M&A financing, combined with less issuance in capital markets due to turmoil in th

28、emarkets.Some of this C&I loan growth is likely to be refinanced in the capital markets as they openTable 4: Higher Period End Loan Growth in 4Q Led by Strong C&I LoansPeriod end loan growth qoqPE Total LoansPE C&I Loans (1)PE CRE Loans (2)3Q184Q183Q184Q183Q184Q18BAC-0.6%1.8%-1.2%4.3%-0.4%0.0%BBT0.3

29、%1.6%-1.0%3.6%-0.7%-1.9%C0.6%1.4%0.9%NA2.8%NACFG1.2%1.7%1.0%2.3%0.8%3.1%FITB1.6%1.9%2.5%3.5%2.4%0.4%JPM0.6%3.2%1.0%NA1.7%NAPNC0.1%1.4%0.2%2.7%-1.3%-1.5%RF1.7%1.6%2.6%3.3%2.0%0.5%STI1.6%3.1%1.3%4.3%-0.2%0.4%USB0.5%1.9%-0.1%3.2%1.4%-1.1%WFC-0.2%1.1%0.6%3.8%-1.9%-0.4%Median (ex-C, JPM)0.5%1.7%0.6%3.5%-

30、0.2%0.0%Source: Company reports and J.P. Morgan estimates. (1) C&I includes commercial leases and is only US loans.(2) CRE includes construction loans.Table 5: However, Average Loan Growth in 4Q was Similar to Growth in 3QAverage loan growth qoqAvg Total LoansAvg C&I Loans (1)Avg CRE Loans (2)3Q184Q

31、183Q184Q183Q184Q18BAC-0.4%0.4%-0.6%1.7%0.2%0.2%BBT1.5%0.9%0.7%1.1%0.1%-0.6%C0.1%0.8%NANANANACFG1.0%1.7%0.3%1.9%4.8%1.9%FITB0.8%1.6%0.4%2.6%2.4%1.9%JPM1.3%1.0%NANANANAPNC0.3%1.2%0.2%2.3%-0.1%-1.7%RF1.3%1.1%1.5%1.9%2.5%0.7%STI1.3%2.5%0.6%2.7%4.3%2.7%USB0.9%0.9%0.7%1.5%-0.8%1.5%WFC-0.5%0.7%-0.4%2.6%-2.

32、1%-0.7%Median (ex-C, JPM)0.9%1.1%0.4%1.9%0.2%0.7%Source: Company reports and J.P. Morgan estimates. (1) C&I includes commercial leases and is only US loans.(2) CRE includes construction loans.Institutional Leveraged Loan Growth Remained Strong In 1Q Despite Wider SpreadsDespitewiderspreads,instituti

33、onalleveragedloanshavecontinuedtheirsharpupwardtrajectory,growingstronglyby 1.7% thus far in 1Q until Jan 31st, after very strong 5.3% qoq growth in4Q.Growth in these loans does not seem to have been materially impacted by the market volatility in 4Q or thesharp outflows from loan mutualfunds.Figure

34、 1: Institutional Leveraged Loan Growth Has Remained Strong Thus Far in 1Q QoQ growth, unannualized, 1Q19 until January 31, 20191.4%1.7%1.4%1.7%1.8%3.6%4.3%5.3%5.5%5%4%3%2%1%0%3Q174Q171Q182Q183Q184Q18Figure 2: Pushing Outstandings to $1.17 trilInstitutional leveraged loans outstanding, $ bilJan 31,

35、2019: $1.166 tril$1,400Jan 31, 2019: $1.166 tril$1,200$1,000$800$600$400$200$-01/0409/0505/0701/0909/1005/1201/1409/1505/1701/19Source: S&P Global Market Intelligence (LCD) and J.P. Morgan calculations. 1Q19 as of January 31, 2019.Source: S&P Global Market Intelligence (LCD).NII To Be Led By Loan Gr

36、owth As NIM Likely Flattish In 1Q19, Mixed In Full Year 19NIM rose a little slower than expected on average, up 1bp qoq in 4Q, same as 3Q increase qoq, despite recovery inLibor.NIM was hurt by flatter yield curve, rising deposit costs, and growth in lower spread C&Iloans.As we look ahead, we expect

37、NIM to be flattish on average qoq in 1Q19, and NIM outlook for 2019 is mixed. Assuming no more rate hikes, we expect NIM to be flat to likely down for some banks and flat to modestly up for others, led by loan growth and deposit growth. There is some benefit from fixed rate assets maturing and being

38、 replaced at higher yields, but this benefit is diminished if long term rates remain low. On a full year basis, 2019 will benefit full impact of the four rate hikes during2018.Table 6: NIM Likely Flattish in 1Q19 and Then Flat to DownFTE net interest marginNIM 4Q18NIM QoQ ChgNIM YoY Chg3Q184Q181Q19E

39、201720182019E2020EBAC2.48%4 bp6 bp(3) bp12 bp5 bp3 bp(2) bpBBT3.49%2 bp2 bp(0) bp7 bp0 bp0 bp(5) bpC2.71%1 bp1 bp1 bp(15) bp(4) bp2 bp2 bpCFG3.22%1 bp3 bp1 bp16 bp17 bp4 bp1 bpFITB3.29%2 bp6 bp(0) bp17 bp17 bp3 bp1 bpJPM2.54%5 bp3 bpNA11 bp14 bpNANAPNC2.96%3 bp(3) bp3 bp15 bp9 bp2 bp(2) bpRF3.55%1 b

40、p5 bp2 bp19 bp17 bp3 bp2 bpSTI3.27%(1) bp0 bp1 bp14 bp13 bp(3) bp(2) bpUSB3.15%2 bp0 bp(2) bp9 bp2 bp(6) bp(2) bpWFC2.94%1 bp0 bp(4) bp1 bp4 bp(2) bp(2) bpMedian (ex-JPM)3.19%1 bp1 bp1 bp13 bp7 bp2 bp(2) bpSource: Company reports and J.P. Morgan estimates.Table 7: NIM Guidance by Our Banks Mostly Fl

41、attish for 1Q, Mixed in 2019Management guidance1Q192019BACFlattishNIINABBTGAAP NIM relatively flat, coreNIM upslightlyqoqNACNAExpect $2 bil+ in NIRgrowthCFG(ex-FAMC)NIM up low/mid single digits,NIM broadlystableqoqNII up 5-6.5%FITBNIM (FTE) up 2-3bp,NII (FTE) down1.5-2%qoqNII (FTE) up 3%PNCNIIstable

42、qoqNARFNIM up slowly as LT assetsNIM relativelystableqoqrepriceSTINIM generally stable to slightlyNIM generallystableqoqdown in any givenquarterUSBNII up low single digits yoy,seasonally lowerqoqNASource: Company reports and management commentary. CFGs guidance excludes impact from Franklin American

43、 acquisition.Deposit Mix Shift Continued With Non-Interest Bearing Down, CDs UpDeposit mix shift continued in 4Q, further decline in non-interest bearing deposits and growth in CDs at ourbanks.On average, non-interest bearing deposits fell 0.8% qoq in 4Q, following 1% qoq decline in 3Q, and were dow

44、n 4.4% onaverage.On average, CDs grew 5.8% qoq in 4Q, following 5.7% qoq growth in 3Q and were up 13.6% yoy onaverage.Table 8: Non-Interest Bearing Deposits Declined Further in 4Q Average non-interest bearing depositsQoQ ChangeYoY4Q171Q182Q183Q184Q184Q18BAC1.2%-2.5%-0.7%-1.2%-0.1%-4.5%BBT1.5%-1.6%1.

45、1%0.4%-0.8%-1.0%C2.3%-0.5%-5.4%-4.4%-2.2%-12.0%CFG2.9%-1.1%1.0%3.0%0.4%3.3%FITB1.9%-4.8%-2.9%-1.5%-2.4%-11.1%JPM1.0%-1.5%0.4%-1.4%-2.1%-4.5%PNC1.5%-3.7%-0.8%-0.6%-1.2%-6.1%RF0.6%-3.5%1.0%-1.1%-0.7%-4.3%STI0.8%-4.0%1.7%-0.9%-0.7%-4.0%USB0.4%-3.4%-0.6%-2.3%0.0%-6.2%WFC0.9%-2.3%0.5%-0.5%-1.2%-3.5%Media

46、n (ex-JPM)1.3%-3.0%-0.1%-1.0%-0.8%-4.4%Source: Company reports.Table 9: While CDs Grew Average CDsQoQ ChangeYoY4Q171Q182Q183Q184Q184Q18BAC-0.7%0.2%3.1%10.5%8.9%24.2%BBT-0.4%0.7%0.9%-4.4%10.0%6.8%CNANANANANANACFG3.1%0.2%8.1%5.2%1.3%15.4%FITB-2.0%-1.3%0.5%9.7%3.8%13.0%JPMNANANANANANAPNC-0.8%-3.4%-1.2%

47、6.7%5.6%7.5%RF0.1%-1.8%-1.8%-0.9%5.9%1.2%STI5.5%9.9%5.9%5.7%4.2%28.3%USB1.7%-0.1%1.4%1.5%10.5%13.6%WFC1.4%8.4%5.7%6.1%5.8%28.6%Median (ex-JPM)0.1%0.2%1.4%5.7%5.8%13.6%Source: Company reports.Table 10: And Drove Total Deposit Growth in 4QAverage total depositsQoQ ChangeYoY4Q171Q182Q183Q184Q184Q18BAC1

48、.7%0.3%0.3%1.2%2.2%4.0%BBT0.3%-0.5%0.3%-0.3%0.4%-0.1%C0.8%0.9%0.4%-0.1%2.0%3.3%CFG0.7%-0.3%1.5%1.6%0.6%3.5%FITB0.9%0.7%0.4%0.7%2.7%4.6%JPM0.4%0.7%1.0%-0.5%0.9%2.1%PNC0.8%-0.3%0.1%0.6%1.5%1.9%RF0.2%-1.7%-0.2%-1.4%-0.8%-4.0%STI0.7%-0.9%-0.1%0.3%1.3%0.6%USB1.2%-1.4%0.1%-1.4%1.3%-1.4%WFC0.4%-1.1%-2.0%-0

49、.4%0.2%-3.3%Median (ex-JPM)0.7%-0.4%0.2%0.1%1.3%1.2%Source: Company reports.Faster Rise In Funding Costs In 4Q, Up More Than Rise In Deposit Costs; Citizens StandoutDeposits and overall funding costs saw a few contrasting drivers in 4Q, with high loan growth fueling fundingneeds, market decline caus

50、ing clients to hold more deposits, and faster rise in Liborrates.However, interest bearing funding costs rose faster by 14bp qoq in 4Q, up from 11bp qoq rise in 3Q on average banks used borrowings to fund loan growth while others useddeposits.Citizens had the best performance as increase in funding

51、costs in 4Q was at the same pace as 3Q. Regions, PNC, Fifth Third, and SunTrust saw faster increases in funding costs, up 5-7bpqoq.Interest bearing deposit costs rose 12bp on average in 4Q, up a tad from 11bp qoq rise in 3Q. US Bancorp saw the highest jump in deposit costs (from 10bp qoq in 3Q to 17

52、bp qoq), followed by Fifth Third. The rise in deposit costs at Regions increased more towards peer levels in4Q.Table 11: Interest Bearing Deposit Costs Rose a Tad Faster In 4QInterest bearing deposit costQoQ ChangeRate 4Q181Q182Q183Q184Q18BAC4 bp7 bp12 bp12 bp0.67%BBT6 bp11 bp9 bp12 bp0.78%C11 bp10

53、bp14 bp7 bp1.36%CFG8 bp15 bp14 bp12 bp1.10%FITB8 bp12 bp11 bp15 bp0.94%JPM6 bp10 bp10 bp11 bp0.72%PNC5 bp10 bp14 bp16 bp0.87%RF5 bp5 bp6 bp10 bp0.54%STI5 bp10 bp10 bp10 bp0.75%USB7 bp12 bp10 bp17 bp0.94%WFC8 bp9 bp10 bp11 bp0.77%Median (ex-JPM)6 bp10 bp11 bp12 bp0.83%Source: Company reports.Table 12

54、: Funding Costs Up More, Partly From Higher Libor Rates, Citizens Flat QoQInterest bearing funding costQoQ ChangeRate 4Q181Q182Q183Q184Q18BAC14 bp20 bp7 bp10 bp1.50%BBT10 bp15 bp12 bp14 bp1.28%C20 bp17 bp10 bp12 bp1.95%CFG11 bp19 bp13 bp13 bp1.40%FITB9 bp15 bp8 bp13 bp1.33%JPM10 bp21 bp12 bp13 bp1.4

55、6%PNC12 bp19 bp11 bp17 bp1.38%RF12 bp8 bp9 bp16 bp1.04%STI8 bp12 bp12 bp17 bp1.10%USB9 bp16 bp13 bp16 bp1.26%WFC16 bp13 bp10 bp14 bp1.34%Median (ex-JPM)12 bp16 bp11 bp14 bp1.33%Source: Company reports.Long Term Rates Down, Yield Curve Very Flat10 Yr Treasury rate has declined to 2.63% with the Feds

56、shift in stance, and is now down since yearend.3 Mth Libor has declined since the beginning of the year by about 6bp to around10YrTreasury yieldand3MthLiborhavefallen asthemarkethasreduceditsprospectsfor furtherFedRatehikes,and both pick back up if the market raises its probabilities for further rat

57、ehikes.As a result, the yield curve is very flat, with 10 Yr - 3 Libor spread inverted again and 2 Yr - 10 Yr spread down to around 15-20bp.Figure 3: 10 Yr Treasury Yield and 3 Mth Libor Down, 1 Mth Libor Flat YieldFigure 4: Hence, Yield Curve Has FlattenedYield spread, bp10 Yr UST:3Q Avg:10 Yr UST:

58、3Q Avg: 2.92%4Q Avg: 3.04%Current: 2.63%1 Mth Libor :3Q Avg:2.11%4Q Avg:2.35%Current:2.51%3 Mth Libor :3Q Avg:2.34%4Q Avg:2.63%Current:2.74%10 Yr UST Yield3 Mth Libor1 Mth Libor3.00%2.50%2.00%1.50%1.00%0.50% Source: Bloomberg. 10 Yr Treasury yield as of January 31, 2019, 1M and 3M Libor as of Januar

59、y 30, 2019.12010 Yr UST - 3 Mth Libor 2 Yr - 10 Yr UST10 Yr - 310 Yr UST - 3 Mth Libor 2 Yr - 10 Yr UST10 Yr - 3Mth:2Yr - 10Yr UST:3Q Avg: 58bp 3Q Avg: 4Q Avg: 41bp 4Q Avg: 24bp Current: -11bp Current: 17bp806040200-20Source: Bloomberg. Treasury yields as of January 31, 2019, 3M Libor as of January

60、30, 2019.Lesser Upside To Long Dated Assets With Flattening Yield CurveThe recent decline in long term rates will reduce the upside to yields on longer dated, fixed rate assets upon maturity/paydown.Amongourbanks, BankofAmerica,WellsFargo,USBancorp,Regions,BB&T,andFifthThirdhaveahighershareof reside