Major banking stocks – JPMorgan Chase & Co. (JPM - Free Report) , Bank of America Corporation (BAC - Free Report) and Citigroup Inc. (C - Free Report) – have come up with better-than-expected results, despite the all-round challenging operating environment. This lifted market sentiments for banking stocks considerably.
However, it is too early to predict the sector’s outperformance as earnings estimates for the banks yet to announce results are not encouraging. Per our Earnings Preview report, overall earnings for the Finance sector (of which banks form a majority part) are expected to be down 3.3% in second-quarter 2016.
The banking sector continues to face global growth worries, lower demand for loans, uncertainty over the timing of the next Fed rate hike, low levels of client activities and volatility in oil prices. Further, the Brexit fallout adds to the concerns.
So, let’s check how the following three companies are expected to perform, when they report their second-quarter 2016 results over the next two days, before the opening bell.
The Bank of New York Mellon Corporation (BK - Free Report) is slated to report on Jul 21. The company expects a marginal rise in net interest income (NII) and net interest margin (NIM) on a sequential basis. Moreover, overall expenses are likely to remain stable during the quarter.
With a Zacks Rank #4 (Sell) and Earnings ESP of 0.00%, BNY Mellon’s chances of beating the Zacks Consensus Estimate are quite low. Also, the Zacks Consensus Estimate for the second quarter indicates a year-over-year fall of about 2.11%. (Read more: BNY Mellon Q2 Earnings: What's in the Cards?)
BB&T Corporation is scheduled to announce results on Jul 21. This Zacks Rank #3 (Hold) bank, which recently closed two major acquisitions, expects expenses to trend upward during the quarter, partly due to the completed deals. Further, management expects NIM to remain under pressure.
On the other hand, loan growth and improvement in non-interest income should support the top line. Additionally, BB&T expects provision for loan losses to be in the low-to-mid range, in the absence of energy deterioration.
Notably, analysts don’t seem to be happy with BB&T’s performance in the just concluded quarter. The company witnessed five downward revisions in earnings estimates (versus two upward revisions) over the last 30 days. (Read more: BB&T Q2 Earnings: Will the Stock Disappoint this Time?)
SunTrust Banks, Inc. is scheduled report on Jul 22. The company’s top line should benefit from improvement in NII and NIM, while lackluster non-interest income performance is likely to be an offsetting factor.
Further, like all banking stocks, this Zacks Rank #3 stock is depending on efficient cost control to support its bottom line. Also, analysts seem to be happy with SunTrust’s business activities in the just concluded quarter. The company witnessed seven upward revisions in earnings estimates (versus two downward revisions) over the last 30 days. (Read more: Will SunTrust Stock Continue to Rise Post Q2 Earnings?).
Stay tuned! Check back on our full write-up on earnings releases of these stocks.
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