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Weak Loan Demand Likely to Hurt Zions (ZION) in Q4 Earnings
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Zions Bancorporation (ZION - Free Report) is slated to report its fourth-quarter and 2023 results on Jan 22, after market close. The overall lending scenario was weak in the quarter amid the uncertain macroeconomic backdrop. Per the Federal Reserve’s latest data, while the demand for commercial and industrial loans (which constitute a large part of Zions’ loan portfolio) was decent in October and December, it declined in November.
Moreover, the Zacks Consensus Estimate for ZION’s average interest-earning assets for the fourth quarter of $80.3 billion indicates a decline of 2.1% from the prior-year quarter’s reported number. Our estimate for the metric is $79.9 billion, indicating a year-over-year decline of 2.5%.
Though the Federal Reserve did not raise rates in the quarter, the policy rate stands at a 22-year high of 5.25-5.5% at present. This is likely to have provided some support to ZION’s net interest income (NII) and net interest margin (NIM).
However, because of the inversion of the yield curve in the December-ended quarter, a slowdown in deposit growth, rising funding costs and weak loan growth, NII and NIM are expected to have been negatively impacted.
The consensus estimate for NII is pegged at $575 million, indicating a 20.1% year-over-year decline. Our estimate for the metric is $562.1 million, suggesting a decline of 21.9%.
Other Key Factors & Estimates for Q4
Fee Revenues: The consensus estimate for commercial account fees of $43.9 million suggests a year-over-year rise of 7.1%. Our estimate for the metric is $45.5 million.
The consensus estimate for dividends and other income of $12.2 million indicates a rise of 35.6% from the previous-year quarter. Our estimate for the metric is $12.9 million.
The consensus estimate for retail and business banking fees is pegged at $17.3 million, suggesting an 8.4% year-over-year rise. We project the metric to be $17.6 million.
Subdued volatility across markets and products is likely to have hurt Zions’ capital markets and foreign exchange fees. The consensus estimate for the same is $19.9 million, suggesting a fall of 9.7% from the prior-year quarter. Our estimate for the metric stands at $19.1 million.
The consensus estimate for card fees of $26.8 million suggests a marginal decline from the prior-year quarter. Our estimate for card fees is pinned at $26.7 million.
The consensus mark for loan-related fees and income is $21.6 million, implying a year-over-year increase of 13.6%. Our estimate for the metric is pinned at $20.2 million.
The Zacks Consensus Estimate for wealth management fees of $15.3 million indicates a rise of 9.4%. Our estimate for the metric is $13.6 million.
The Zacks Consensus Estimate for total non-interest income is pegged at $171 million, indicating a rise of 11.8% from the prior-year quarter’s reported number. Our estimate for the metric is pegged at $166.5 million.
Expenses: Zions has been witnessing a persistent rise in operating expenses over the past few years. As the company continues to invest in franchise and digitize operations, its expenses are expected to have been elevated in the fourth quarter.
Our estimate for total non-interest expenses is pegged at $483.7 million, indicating a year-over-year rise of 2.7%.
Asset Quality: ZION is expected to have set aside a huge amount of money for potential bad loans, given an uncertain macroeconomic outlook. Our estimate for provision for credit losses is pegged at $61.4 million, suggesting a rise of 42.7% from the prior-year quarter’s actual.
The Zacks Consensus Estimate for total non-accrual loans is pegged at $222 million, suggesting a year-over-year rise of 49%. The consensus estimate for total non-performing assets of $203 million indicates an increase of 36.2% from the prior-year quarter.
What the Zacks Model Predicts
Our proven quantitative model does not predict an earnings beat for Zions this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) — to increase the odds 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 Zions is -4.06%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Q4 Earnings & Sales Growth Expectations
The Zacks Consensus Estimate for Zions’ fourth-quarter earnings is pegged at $1.00 per share, suggesting a year-over-year decline of 45.7%. The estimate has been revised 1% upward over the past seven days. Our estimate for earnings is 91 cents per share.
The consensus estimate for sales is pegged at $754.8 million, indicating a fall of 14.5% from the prior-year reported figure. Our estimate for sales is pinned at $737.9 million.
Here are a couple of bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time:
Bank OZK (OZK - Free Report) is slated to report fourth-quarter and 2023 results on Jan 18. OZK has an Earnings ESP of +5.97% and a Zacks Rank #3 at present.
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Weak Loan Demand Likely to Hurt Zions (ZION) in Q4 Earnings
Zions Bancorporation (ZION - Free Report) is slated to report its fourth-quarter and 2023 results on Jan 22, after market close. The overall lending scenario was weak in the quarter amid the uncertain macroeconomic backdrop. Per the Federal Reserve’s latest data, while the demand for commercial and industrial loans (which constitute a large part of Zions’ loan portfolio) was decent in October and December, it declined in November.
Moreover, the Zacks Consensus Estimate for ZION’s average interest-earning assets for the fourth quarter of $80.3 billion indicates a decline of 2.1% from the prior-year quarter’s reported number. Our estimate for the metric is $79.9 billion, indicating a year-over-year decline of 2.5%.
Though the Federal Reserve did not raise rates in the quarter, the policy rate stands at a 22-year high of 5.25-5.5% at present. This is likely to have provided some support to ZION’s net interest income (NII) and net interest margin (NIM).
However, because of the inversion of the yield curve in the December-ended quarter, a slowdown in deposit growth, rising funding costs and weak loan growth, NII and NIM are expected to have been negatively impacted.
The consensus estimate for NII is pegged at $575 million, indicating a 20.1% year-over-year decline. Our estimate for the metric is $562.1 million, suggesting a decline of 21.9%.
Other Key Factors & Estimates for Q4
Fee Revenues: The consensus estimate for commercial account fees of $43.9 million suggests a year-over-year rise of 7.1%. Our estimate for the metric is $45.5 million.
The consensus estimate for dividends and other income of $12.2 million indicates a rise of 35.6% from the previous-year quarter. Our estimate for the metric is $12.9 million.
The consensus estimate for retail and business banking fees is pegged at $17.3 million, suggesting an 8.4% year-over-year rise. We project the metric to be $17.6 million.
Subdued volatility across markets and products is likely to have hurt Zions’ capital markets and foreign exchange fees. The consensus estimate for the same is $19.9 million, suggesting a fall of 9.7% from the prior-year quarter. Our estimate for the metric stands at $19.1 million.
The consensus estimate for card fees of $26.8 million suggests a marginal decline from the prior-year quarter. Our estimate for card fees is pinned at $26.7 million.
The consensus mark for loan-related fees and income is $21.6 million, implying a year-over-year increase of 13.6%. Our estimate for the metric is pinned at $20.2 million.
The Zacks Consensus Estimate for wealth management fees of $15.3 million indicates a rise of 9.4%. Our estimate for the metric is $13.6 million.
The Zacks Consensus Estimate for total non-interest income is pegged at $171 million, indicating a rise of 11.8% from the prior-year quarter’s reported number. Our estimate for the metric is pegged at $166.5 million.
Expenses: Zions has been witnessing a persistent rise in operating expenses over the past few years. As the company continues to invest in franchise and digitize operations, its expenses are expected to have been elevated in the fourth quarter.
Our estimate for total non-interest expenses is pegged at $483.7 million, indicating a year-over-year rise of 2.7%.
Asset Quality: ZION is expected to have set aside a huge amount of money for potential bad loans, given an uncertain macroeconomic outlook. Our estimate for provision for credit losses is pegged at $61.4 million, suggesting a rise of 42.7% from the prior-year quarter’s actual.
The Zacks Consensus Estimate for total non-accrual loans is pegged at $222 million, suggesting a year-over-year rise of 49%. The consensus estimate for total non-performing assets of $203 million indicates an increase of 36.2% from the prior-year quarter.
What the Zacks Model Predicts
Our proven quantitative model does not predict an earnings beat for Zions this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) — to increase the odds 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 Zions is -4.06%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Q4 Earnings & Sales Growth Expectations
The Zacks Consensus Estimate for Zions’ fourth-quarter earnings is pegged at $1.00 per share, suggesting a year-over-year decline of 45.7%. The estimate has been revised 1% upward over the past seven days. Our estimate for earnings is 91 cents per share.
The consensus estimate for sales is pegged at $754.8 million, indicating a fall of 14.5% from the prior-year reported figure. Our estimate for sales is pinned at $737.9 million.
Zions Bancorporation, N.A. Price and EPS Surprise
Zions Bancorporation, N.A. price-eps-surprise | Zions Bancorporation, N.A. Quote
Stocks That Warrant a Look
Here are a couple of bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time:
Bank OZK (OZK - Free Report) is slated to report fourth-quarter and 2023 results on Jan 18. OZK has an Earnings ESP of +5.97% and a Zacks Rank #3 at present.
T. Rowe Price Group, Inc. (TROW - Free Report) is scheduled to release quarterly results on Feb 8. TROW, which carries a Zacks Rank #3 at present, has an Earnings ESP of +4.11%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.