美国大型银行业Q1预览

1、Large Cap Banks 1Q Preview1Q: Weak Mkts, Including Lag Effects, C&I Loans Better Than Feared, NIM Down; Priced In?We expect 1Q earnings to be soft, marked weak markets-related revenues, in interest rate environment, and seasonal decline in some fee income areas. We expect a modest decline in net int

2、erest margins (NIM) but decent loan growth, benefiting strong 4Q growth. Key concern is whether banks are seeing any signs of weakness in their customers even though credit quality currently looks strong. Capital markets activity, notably equity issuance has picked up since late March, and M&A activ

3、ity also increased in March. Conversely, in a shift, institutional leveraged loan growth slowed in March. Bank stocks lagged post Feds shift in stance interest rates, have been recently, and are still attractively valued. We believe expectations for a weak 1Q are priced in. Relatively, leading into

4、1Q, we like Citi and Regions should be less impacted by a flatter yield curve (vs peers), and Regions has better qoq comps given a messy 4Q. Bank America will be impacted by both lower rates and lagged 4Q markets-related impact on fees. And US Bancorp will likely be hurt seasonal weakness in and inc

5、reased pricing pressure in payments business, exacerbated by timing issues in 1Q. We are trimming estimates to reflect weak markets-related revenues plus some impact from lower interest rates and a flatter curve. Medium term, challenge for bank stocks is lack of catalysts with no more rate hikes, fl

6、atter yield curve, and moderate loangrowth.Period end C&I growth on qoq basis likely better feared given extremely strong 4Q, based on Fed H8 data. PE C&I loan growth is generally seasonally weaker in 1Q. This continued in 1Q19, but qoq growth remained similar to 1Q18 growth despite strong boost in

7、4Q weak capital markets and concerns that some would be refinanced in the markets as those recovered. Average loan growth in 1Q looks better due to growth from4Q.We expect NIM to be 1bp qoq on average due to hit higher MBS premium amortization and continued increase in deposit costs, coupled with in

8、crease in 1 month Libor in 1Q, which drives commercial loan yields. We NIM to decline a little further in 2019 if interest rates stay at currentlevels.Credit remains fine. banks have reduced subprime consumer loans post crisis, and holdings leveraged loans. have returned a lot of capital partly due

9、to slow loan growth. We some modest seasoning to drive increase in credit losses near term, partly because net recoveries cannot continueindefinitely.Weak investment banking volumes in 1Q in most categories, equity issuance this was partly due to govt. shutdown. Equity issuance picked up strongly in

10、 late March and has continued into April. M&A volumes also rose sharply in March for the best month since April 2018. Trading revenues are likely to be down yoy, partly due to tough comps, especially inequities.Mortgage origination revenues should rise, led by higher refis and gain on sale margins.

11、However, this will likely be offset at some banks by net MSR hedge losses with impairments from the sharp in rates. Per MBA, applications rose 17%qoq.Banks are attractively valued despite recent recovery. Money Centers are trading at 9.2x 2020 EPS on average, below 10.0 x long term average (ex. 08-1

12、1) Regionals at 9.6x 2020 EPS, also below 11.4x average. On relative P/E basis, Regionals are modestly below long term average, and Money Centers arein-line.North America Equity Research09 April 2019Banks Large-Cap Vivek Juneja AC(1-212) 622-6465 HYPERLINK mailto:vivek.juneja vi HYPERLINK mailto:vek

13、.juneja vek.junejaBloomberg JPMA JUNEJA Jonathan Summitt(1-212) 622-6341 HYPERLINK mailto:jonathan.summitt jonathan.summittAndrew J Dietrich(1-212) 622-4244 HYPERLINK mailto:aj.dietrich aj.dietrichJ.P. Morgan Securities LLCSee page 36 for analyst certification and important disclosures.J.P. Morgan d

14、oes 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

15、 decision. HYPERLINK / Vivek Juneja(1-212) 622-6465 HYPERLINK mailto:vivek.juneja vi HYPERLINK mailto:vek.juneja vek.junejaNorth America Equity Research09 April 2019Equity Ratings and Price TargetsCompanyTickerMkt Cap ($ mn)Price ($) Curng PrevCur Price TargetEndDateEnd DateBank of AmericaBAC US282,

16、053.1029.17OWn/c30.50Dec-1931.00n/cBB&T CorporationBBT US37,051.8448.54Nn/c51.50Dec-1950.50n/cCitigroup Inc.C US156,486.8066.07OWn/c72.50Dec-19n/cn/cCitizens Financial GroupCFG US16,156.5034.67OWn/c41.50Dec-1942.50n/cFifth Third BancorpFITB US17,374.9726.87Nn/c30.50Dec-19n/cn/cPNC FinancialPNC US59,

17、375.12128.24OWn/c133.50Dec-19134.00n/cRegions FinancialRF US15,621.0015.24OWn/c17.50Dec-19n/cn/cSunTrust Banks, Inc.STI US27,666.8461.91OWn/c67.00Dec-1966.50n/cU.S. BancorpUSB US80,207.0449.88UWn/c51.00Dec-1951.50n/cWells FargoWFC US223,933.9048.88UWn/c52.00Dec-1954.50n/cSource: Company data, Bloomb

18、erg, J.P. Morgan estimates. n/c = no change. All prices as of 08 Apr 19.1Q EPS To Be Led By Weak Non-Interest Income, Modestly Lower Net Interest IncomeWeexpect1Qearningstobemarkedby: 1)seasonalslowdowninperiodendloangrowth,butaverageloangrowthtohold up due to strong growth at end of 4Q; 2) modest d

19、ecline in net interest income and net interest margins (NIM) from day count, lower long term rates, and flat 1 month Libor rates; 3) weak non-interest income, primarily from weakness in markets- related areas including investment banking, trading, retail brokerage, and asset management, mixed trends

20、 in mortgage banking,andseasonalweaknessinpayments-relatedfeeincomeanddepositservicecharges;4)seasonallyhigherexpenses;5) continued good credit quality, but increase in provisions from lower reserve releases and some reserve builds; and 6) continued capital return.Adjusting estimates to reflect: 1)

21、further decline in interest rates; 2) rebound in market valuations from December lows;and3) company news and guidance.oWells Fargos reported EPS is up due to a gain on sale of pick-a-pay loans, partly offset by some additional reserves forlitigation.Table 1: EPS Estimate Changes$ per shareSource: J.

22、P. Morgan estimates.Loan Growth Soft In 1Q From Seasonality Plus Weak Other Loans, But C&I Better Than FearedPer Fed data, total loans at large banks were down 1.1% qoq (+3.0% yoy) on period end basis through March 27th. trendsled byaverysharpdropinotherloans,seasonalslowdowninC&Iloangrowth,andseaso

23、naldeclineincreditcards.C&I loans rose 0.7% qoq and 8.7% yoy, a little below 9.0% yoy growth in 4Q. Despite extraordinarily high growth in 4Q, C&I loans have held up in 1Q, with modest qoq growth, similar to year ago in 1Q18 this is better than feared as C&I loans may have fallen in 1Q if part of th

24、e growth in 4Q was due to challenging conditions in the capital markets. Large part of the rest of the strong growth in 4Q was from financing of very high volume of closings. However, C&I plus other loans fell 0.8% qoq (+7.3% due to very sharp 5.3% qoq drop in all otherCredit card loan growth remain

25、s slow up 2.4% in 1Q, close to 1.9%-2.2% yoy growth in 2H18 and far below 4.4%- 5.0% yoy growth in 1H18. Credit card loans were down qoq seasonally (vs 5.9% qoq drop in1Q18).Table 2: Total Loans Down 1.1% QoQ, Led by Weakness in Other Loans, Seasonal Decline in Cards, and Seasonally Slower C&I Growt

26、hLarge Banks period end growth, adjusted for M&A, as of March 27, 2019Source: Federal Reserve and J.P. Morgan calculations. (1) 1Q19 adjusted for M&A. (2) Other is the sum of Loans to Non-Depository Financial Institutions and All Other. (3) Excludes Fed Funds sold and reverse repos.Table 3: Average

27、Loan Growth in 1Q to Benefit from Strong Growth Seen at End of 4QAverage total loan growthQoQ ChgYoY Chg3Q184Q181Q19E2019EBAC-0.4%0.4%1.1%2.3%BBT1.5%0.9%0.8%4.1%C0.1%0.8%1.2%3.1%CFG1.0%1.7%1.3%5.5%FITB (ex MBFI)0.8%1.6%1.2%4.1%PNC0.3%1.2%1.0%3.6%RF1.3%1.1%1.6%4.3%STI1.3%2.5%1.9%7.0%USB0.9%0.9%0.9%3.

28、5%WFC-0.5%0.7%0.7%1.7%Median0.9%1.0%1.2%3.8%Source: Company reports and J.P. Morgan estimates. FITB is adjusted to exclude impact from its acquisition of MBFI.Figure 1: Institutional Leveraged Loans Up 19.3% YoY to $1.18 TrilInstitutional leveraged loans outstanding, $ bilInstitutional Leveraged Loa

29、n Growth Slowed Later In 1Q Reasons Not Entirely Clear$1,200YoY Growth: 19.3%$1,000$800$1,200YoY Growth: 19.3%$1,000$800$600$400$200$-$1,400Apr$1,400Apr8,2019:$1.180trilThe reasons for the recent slowdown in institutional leveraged loan growth are not fully clear. Part of this may reflect an increas

30、e in high yield bond originations. Mutual find outflows have been occurring since November.Source: S&P Global Market Intelligence (LCD).Figure 2: Leveraged Loan Growth Slowed a Little to 3.0% QoQ in 1Q QoQ institutional leveraged loans outstanding growth -0.5% -0.5% 1.4%1.8%3.0%3.6%4.3%5.3%5.5%5.6%6

31、.0%5.0%4.0%3.0%2.0%1.0%0.0%-1.0%1Q172Q173Q174Q171Q182Q183Q184Q18Figure 3: As Growth Slowed in February and Slowed Further in MarchMoM institutional leveraged loans outstanding growth 0.3% 0.3% 0.2% 0.3% -0.9%0.9%1.0%1.0%1.6%1.7%1.5%1.0%0.5%0.0%-0.5%-1.0%Jan 17 Feb 17 Mar17Jan 18 Feb 18 Mar18Jan 19 F

32、eb 19 Mar19Source: S&P Global Market Intelligence (LCD). As of March29,2019.Source: S&P Global Market Intelligence (LCD). As of March 29,2019.NIM Likely Down Modestly And Likely To Continue On This PathNet interest margins (NIM) are likely to decline modestly by 1bp qoq on average in 1Q, partly driv

33、en by flat 1 month Libor, which drives commercial loan yields, as well as sharp drops in medium term and long term rates. These would offset benefit from day count and increase in Prime-based consumer loan yields. We expect this trend in NIM to continue in 2019, with no more Fed rate hikes and a fla

34、tter yieldcurve.Decline in long term rates is likely to hurt 1Q19 NIM, partly due to higher MBS premium amortizationexpense.We expect: 1) further rise in deposit costs, albeit with slower increase than during 2018; and 2) continued mix shift with run- off of non-interest bearing deposits, albeit at

35、a slower rate, and growth inCDs.Table 4: We Expect NIMs Likely Down Modestly in 1Q FTE net interest marginQoQ Chg4Q18 NIM3Q184Q181Q19EBAC4 bp7 bp(3) bp2.52%BBT2 bp2 bp(0) bp3.49%C1 bp1 bp(1) bp2.71%CFG-3 bp(3) bp3.25%FITB (ex MBFI)2 bp6 bp(0) bp3.29%PNC3 bp(3) bp0 bp2.96%RF1 bp5 bp(0) bp3.55%STI(1)

36、bp-(0) bp3.27%USB2 bp-(2) bp3.15%WFC1 bp-(4) bp2.94%Median1 bp1 bp(1) bp3.20%Source: Company reports and J.P. Morgan estimates. FITB is adjusted to exclude impact from its acquisition of MBFI.Table 5: And NIM to be Down on Average in Full Year 2019 Versus 4Q18 Run RateFTE net interest marginYoY ChgC

37、hg FY2019Evs4Q1820172018BAC15 bp5 bp(4) bpBBT7 bp0 bp(2) bpC(15) bp(4) bp(4) bpCFG20 bp16 bp(4) bpFITB (ex MBFI)17 bp17 bp(2) bpPNC15 bp10 bp(1) bpRF19 bp17 bp(4) bpSTI14 bp13 bp(5) bpUSB9 bp2 bp(10) bpWFC1 bp4 bp(7) bpMedian14 bp8 bp(4) bpSource: Company reports and J.P. Morgan estimates. FITB is a

38、djusted to exclude impact from its acquisition of MBFI.Yield Curve Inverted Further In 1Q, Even As Rates Declined Across The Entire CurveLong term and medium term rates fell sharply in 1Q, with 10 year Treasury yields down 28bp qoq to 2.41% and 2 year Treasuries down 23bp qoq to 2.26%, as the Fed tu

39、rned more dovish. There will be some immediate capital benefit in 1Q for banks with more than $250 bil in assets as securities are marked to market. But this will be offset over time by higher MBS premium amortization and lower reinvestment yields on longer duration assets like residential mortgages

40、 andMBS.Libor rates were mixed, with 1 month Libor flat qoq and 3 month Libor down 21bp qoq from 2.81% atYE18.Yieldcurveis aheadwind,withthe10yrTreasury - 3mthLiborspreadinvertingfurtherto -19bp,andthe2-10yrTreasury spread down to about15bp.Figure 4: 10 Yr Treasury Yield Down More Than 3 Month Libor

41、 10 Yr UST:4Q Avg:10 Yr UST:4Q Avg: 3.04%1Q Avg: 2.65%1Q PE: 2.41%2 Yr UST:3 MthLibor:4Q Avg: 2.80%4Q Avg: 2.63%1Q Avg: 2.49%1Q Avg: 2.69%1Q PE: 2.26%1Q PE: 2.60%10 Yr USTYr USTMthLiborFigure 5: Causing Yield Curve to Invert FurtherYield spread, basis points10 Yr UST - 3 Mth Libor:10 Yr - 2 Yr UST:4

42、Q Avg: 41bp 1Q Avg: -4bp 1Q PE: -19bp4Q Avg: 24bp 1Q Avg: 16bp 1Q PE: 15bp4Q Avg: 41bp 1Q Avg: -4bp 1Q PE: -19bp4Q Avg: 24bp 1Q Avg: 16bp 1Q PE: 15bp10 Yr UST - 3 Mth Libor10 Yr - 2 Yr USTSource: Bloomberg and J.P. Morgan calculations. As of March 29, 2019.01/1407/1402/1509/1504/1611/1606/1701/1808/

43、1803/19Source: Bloomberg and J.P. Morgan calculations. As of March 29, 2019.Period End Deposits Down Modestly; Securities Up ModestlyDeposits declined modestly by 0.6% qoq on period end basis per Fed weekly data. This decline is likely partly seasonal andlikelypartlyduetocontinueddepositoutflowsinto

44、higheryieldingalternatives.Averagedepositsareup0.5%qoq.Securities were modestly by 0.5% qoq on period end basis and are up moderately by 1.7% qoq average basis. Average growth reflects the impact of strong growth inReported securities amount should benefit in 1Q from unrealized gains as a result of

45、the decline in interest ratesqoq.Figure 6: Period End Deposits Down Modestly by 0.6% QoQLarge Banks deposit QoQ growthAveragePeriod EndAveragePeriod End3.9%1.6%0.9% 1.0%0.2% 0.0%0.5%0.2%-0.7%-0.6%4.0%3.0%2.0%1.0%0.0%-1.0%-2.0%1Q182Q183Q184Q181Q19Figure 7: Period End Securities Up Modestly by 0.5% Qo

46、QLarge Banks securities (ex unrealized g/l) QoQ growthAveragePeriod EndAveragePeriod End3.2%2.0%1.5%1.7%0.9%0.8%0.5%-0.4%-1.2%-1.8%2.5%1.5%0.5%-0.5%-1.5%-2.5%1Q182Q183Q184Q181Q19Source: Federal Reserve, J.P. Morgan calculations. As of March 27, 2019. Average is of weekly figures. 1Q19 is adjustedfor

47、M&A.Source: Federal Reserve, J.P. Morgan calculations. As of March 27, 2019. Average is of weekly figures. 1Q19 is adjusted forM&A.Weak Investment Bkg, Led By Equity, Syndicated Loans, But M&A, High Yield Up Sharply QoQInvestment banking fees are likely to be down yoy in 1Q across all areas, more so

48、 in equity issuance and syndicated loans. PerDealogicdata,industryfeesaredown14%yoyanddown5%qoq,and willlikelyendupwithslightlylessdecline.Equity underwriting activity was hurt by the government shutdown as deals were delayed. Equity underwriting did pick up in late March, and this acceleration shou

49、ld continue into2Q.Loan syndications are down sharply yoy, with a large drop in leveraged loans. Total debt underwriting is downmoderately yoy, with high yield issuance down but up very strongly from 4Q (high yield is higher feerate).CompletedM&Aisdownsharplyqoqafterastrong4Q.However,announcedM&Aisu

50、psizablyversuslastcoupleof quarters but down sizably yoy March was the highest month for announced M&A volumes since April2018.Table 6: Investment Banking Volumes Weak Across All AreasVolume, $ bil, as of April 8, 2019Source: Dealogic and J.P. Morgan calculations.Table 7: Industry Investment Banking

51、 Fees Down YoYFees, $ mil, as of April 8, 2019Source: Dealogic and J.P. Morgan calculations.Trading Weak YoY Vs Tough Comps But Up From Very Weak 4QTrading revenues at our banks are likely to be weak yoy in 1Q but better than very poor 4Qresults.FICC trading is likely to be down yoy but up sharply f

52、rom very weak 4Q. Volumes were slower mid quarter. volatility is mixed basis, with G7 down 6% yoy and EM up 9% yoy, but both are down qoq. F/X 1Q volumes on exchanges are down sharply yoy by 17%-20% (mixed qoq). EM trading results should be better qoq with spreadstighter.Equities trading should be d

53、own yoy due to tough comps, as 1Q18 was very strong, and down due to lower volatility. Meanwhile, cash equities trading volumes are mixed, down sharply in Asia, up in London, and flattish in theUS.Table 8: Volatility Down QoQ; Credit Spreads Reversed Part of Widening Seen in 4QTrading metrics, as of

54、 March 29, 2019Source: Bloomberg and J.P. Morgan calculations. (1) In the case of volumes and volatility, amount refers to daily averages for the latest week of data.Table 9: Trading Revenues Down YoY but Up QoQ1Q19E, $ milBACCFICC Trading2,3313,117QoQ Chg61%61%YoY Chg-8%-9%Equity Trading1,246989QoQ

55、 Chg18%48%YoY Chg-18%-10%Total Trading3,5774,106QoQ Chg43%57%YoY Chg-12%-9%Investment Banking1,3511,243QoQ Chg0%-3%YoY Chg0%10%Source: Company reports and J.P. Morgan estimates.Leveraged Loan, High Yield Spreads Tighter In 1Q But Softer In MarchLeveraged loan and high yield spreads tightened overall

56、 in 1Q, but there was some pause inMarch.oSpreads tightened sharply in first couple of weeks in January, tightened further in February, and then were choppy in March and earlyApril.Looking by sector, spreads have tightened in all sectors without that much variation across sectors, ranging from down

57、84bp to down 205bp. Median decline was128bp.Figure 8: High Yield, Leveraged Loan Spreads Down in 1Q MoM change in leveraged loan and high yield spreads, basis points108 103108 103Leveraged Loan SpreadHigh Yield Spread to Worst5450 451925 16(19)(44) (37)(28)(66)(93)10050Table 10: And Across All Secto

58、rsHigh yield spread to worst, basis points- Oct 18Nov 18Dec 18Jan19Feb Mar 19Spread 4/5/2019Spread 4/5/2019VarianceYE 18 vsYE 174Q18 vs 3Q18Latest vs YE18Automotive3698977(91)Broadcasting305(347)142(148)Cable and Satellite35911161(111)Chemicals34415235(214)Consumer Products406(10)199(148)Diversified

59、 Media55664147(88)Energy583117304(136)Financial Spread39361183(121)Food and Beverages37362164(125)Gaming Lodging And Leisure31326154(127)Healthcare421(52)204(149)Housing415142190(104)Industrials37628196(128)Metals and Mining45858212(115)Paper and Packaging Spread30312115(87)Retail715(135)206(163)Ser

60、vices40616200(183)Technology309(4)214(207)Telecommunications58624233(147)Transportation327(2)203(164)Utility285(118)116(132)MedianHigh Yield Spread To Worst3764251620196202(132)(142)Source: J.P. Morgan. As of April 5, 2019.Source: J.P. Morgan. As of April 5, 2019.Mortgage Banking Trends Mixed Higher