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SVB Financial (SIVB) Gains From Global Expansion, Loan Growth

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SVB Financial remains poised to continue to benefit from a solid balance sheet position and impressive global expansion strategy. Moreover, the company’s focus on improving non-interest income is likely to aid growth.

Analysts also seem to be optimistic regarding SVB Financial’s earnings growth potential. The Zacks Consensus Estimate for its 2022 earnings has been revised upward by 14.5% over the past 60 days. Thus, the company currently sports a Zacks Rank #1 (Strong Buy).

Over the past year, shares of SVB Financial have lost 26.9% compared with the industry's decline of 15%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Looking at its fundamentals, SIVB’s net loans witnessed a compound annual growth rate (CAGR) of 41.6% over the last three years (2019-2021). Also, net interest income (NII) and deposits saw a CAGR of 23.1% and 28.5%, respectively, over the same time frame. The uptrend for loans, NII and deposits continued in first-quarter 2022.

Moreover, the company has been undertaking efforts to expand globally. While its U.K. and Asia operations seem to be growing, businesses in Canada and Germany are expected to further boost revenues. The company’s international (reflects operations in the U.K., Europe, Israel, Asia and Canada) core fee income witnessed a five-year (ended 2021) CAGR of 34%.

Continuing with its efforts to expand into technology investment banking, SVB Financial acquired technology equity research firm MoffettNathanson in December 2021. In July, it acquired Boston Private, which is expected to further strengthen its private bank and wealth management offerings. These, along with the past few deals, will keep supporting SVB Financial’s position as one of the foremost providers of financing solutions to innovative companies.

Further, SVB Financial boasts a solid balance sheet. Its current liquidity position seems sufficient to help it meet debt obligations in the near term, even if the economic situation worsens.

While the low interest-rate environment has been hurting SIVB’s margins to an extent for the past few years, the trend is expected to reverse in the near term. With the Federal Reserve having raised interest rates twice already this year and with expectations of more such hikes in the future, SVB Financial’s net interest margin is likely to witness improvement.

Other Stocks to Consider

A couple of other top-ranked stocks from the finance space are S&T Bancorp, Inc. (STBA - Free Report) and Evercore Inc. (EVR - Free Report) . Both STBA and EVR currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for S&T Bancorp’s current-year earnings has been revised 13.7% upward over the past 60 days. Over the past year, STBA’s share price has declined 19%.

Evercore’s current-year earnings estimates have been revised 2.1% upward over the past 60 days. EVR’s shares have lost 31.4 % over the past year.


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