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Why is Q1 Earnings Beat Less Likely for SVB Financial (SIVB)?
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SVB Financial Group is scheduled to report first-quarter 2022 results on Apr 21, after market close. The company largely caters to start-up, venture capital and private equity communities. The overall demand for loans from such niche sectors continued to improve in the to-be-reported quarter.
Hence, SIVB is expected to have witnessed sizeable growth in total loan balances. The Zacks Consensus Estimate for average total interest-earning assets for the first quarter is pegged at $211.6 billion, suggesting a rise of 7.7 % from the prior quarter’s reported number.
Thus, supported by the increasing loan demand along with the hike in interest rates in mid-March, SVB Financial’s net interest income (NII) is likely to have increased in the quarter. The consensus estimate for NII (on a tax-equivalent basis) is pegged at $1 billion, which implies growth of 7.6% sequentially.
Other Key Factors and Estimates for Q1
Non-Interest Income: The consensus estimate for deposit service charges is pegged at $31.20 million, indicating a 4% rise on a sequential basis.
Moreover, as consumer confidence continued to improve, there was an improvement in credit card loans. Thus, the Zacks Consensus Estimate for credit card fees of $40.10 million indicates a rise of 5.5% from the previous quarter’s reported number.
The Zacks Consensus Estimate for client investment fees of $27.14 million suggests a 35.7% improvement from the previous quarter’s reported figure.
However, the consensus estimate for lending-related fees of $20.98 million indicates a marginal fall from the prior quarter’s reported number. The Zacks Consensus Estimate for foreign exchange fees is pegged at $74 million, suggesting a rise of 1.4% from the prior-quarter reported level.
Thus, the consensus estimate for core fee income (including client investment fees, foreign exchange fees, credit card fees, deposit service charges, lending-related fees, and letters of credit fees) of $218 million indicates a rise of 1% sequentially.
The Zacks Consensus Estimate for investment banking fees of $82 million suggests a fall of 33.9% sequentially. The consensus estimate for commissions of $19.25 million indicates an 8.3% sequential decline.
The consensus estimate for total non-interest income of $460 million implies an 18% decrease sequentially.
Expenses: SVB Financial has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and hiring. As the company has been expanding inorganically, expenses related to these will be incurred. Thus, overall costs are likely to have risen in the to-be-reported quarter.
Credit Quality: The Zacks Consensus Estimate for total non-performing assets of $100 million suggests a rise of 8.7% sequentially. The consensus estimate for total non-performing loans of $97 million implies a rise of 6.6%.
What the Zacks Model Unveils
According to our proven model, the chances of SVB Financial beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to be confident of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for SVB Financial is -3.26%.
Zacks Rank: The company currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $5.37 per share, which has moved 3.8% lower over the past seven days. The figure indicates a year-over-year decline of 46.5%.
The consensus estimate for sales of $1.43 billion suggests growth of 1.7% from the prior-year quarter’s reported number.
Associated Bancorp (ASB - Free Report) , Independent Bank Corporation (IBCP - Free Report) and M&T Bank (MTB - Free Report) are a few stocks from the finance space that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
MTB is scheduled to release first-quarter results on Apr 20. MTB currently has a Zacks Rank #3 and an Earnings ESP of +5.43%.
The Earnings ESP for ASB is +0.81% and the company carries a Zacks Rank #2 (Buy) at present. ASB is slated to report results on Apr 21.
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Why is Q1 Earnings Beat Less Likely for SVB Financial (SIVB)?
SVB Financial Group is scheduled to report first-quarter 2022 results on Apr 21, after market close. The company largely caters to start-up, venture capital and private equity communities. The overall demand for loans from such niche sectors continued to improve in the to-be-reported quarter.
Hence, SIVB is expected to have witnessed sizeable growth in total loan balances. The Zacks Consensus Estimate for average total interest-earning assets for the first quarter is pegged at $211.6 billion, suggesting a rise of 7.7 % from the prior quarter’s reported number.
Thus, supported by the increasing loan demand along with the hike in interest rates in mid-March, SVB Financial’s net interest income (NII) is likely to have increased in the quarter. The consensus estimate for NII (on a tax-equivalent basis) is pegged at $1 billion, which implies growth of 7.6% sequentially.
Other Key Factors and Estimates for Q1
Non-Interest Income: The consensus estimate for deposit service charges is pegged at $31.20 million, indicating a 4% rise on a sequential basis.
Moreover, as consumer confidence continued to improve, there was an improvement in credit card loans. Thus, the Zacks Consensus Estimate for credit card fees of $40.10 million indicates a rise of 5.5% from the previous quarter’s reported number.
The Zacks Consensus Estimate for client investment fees of $27.14 million suggests a 35.7% improvement from the previous quarter’s reported figure.
However, the consensus estimate for lending-related fees of $20.98 million indicates a marginal fall from the prior quarter’s reported number. The Zacks Consensus Estimate for foreign exchange fees is pegged at $74 million, suggesting a rise of 1.4% from the prior-quarter reported level.
Thus, the consensus estimate for core fee income (including client investment fees, foreign exchange fees, credit card fees, deposit service charges, lending-related fees, and letters of credit fees) of $218 million indicates a rise of 1% sequentially.
The Zacks Consensus Estimate for investment banking fees of $82 million suggests a fall of 33.9% sequentially. The consensus estimate for commissions of $19.25 million indicates an 8.3% sequential decline.
The consensus estimate for total non-interest income of $460 million implies an 18% decrease sequentially.
Expenses: SVB Financial has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and hiring. As the company has been expanding inorganically, expenses related to these will be incurred. Thus, overall costs are likely to have risen in the to-be-reported quarter.
Credit Quality: The Zacks Consensus Estimate for total non-performing assets of $100 million suggests a rise of 8.7% sequentially. The consensus estimate for total non-performing loans of $97 million implies a rise of 6.6%.
What the Zacks Model Unveils
According to our proven model, the chances of SVB Financial beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to be confident of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for SVB Financial is -3.26%.
Zacks Rank: The company currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $5.37 per share, which has moved 3.8% lower over the past seven days. The figure indicates a year-over-year decline of 46.5%.
The consensus estimate for sales of $1.43 billion suggests growth of 1.7% from the prior-year quarter’s reported number.
SVB Financial Group Price and EPS Surprise
SVB Financial Group price-eps-surprise | SVB Financial Group Quote
Stocks to Consider
Associated Bancorp (ASB - Free Report) , Independent Bank Corporation (IBCP - Free Report) and M&T Bank (MTB - Free Report) are a few stocks from the finance space that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
MTB is scheduled to release first-quarter results on Apr 20. MTB currently has a Zacks Rank #3 and an Earnings ESP of +5.43%.
The Earnings ESP for ASB is +0.81% and the company carries a Zacks Rank #2 (Buy) at present. ASB is slated to report results on Apr 21.
IBCP is scheduled to release quarterly results on Apr 26. IBCP currently has a Zacks Rank #2 and an Earnings ESP of +10.00%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.