The earnings season seems to have gotten off to a decent start for bank stocks. Banks, which have reported so far, recorded improvement in earnings and revenues amid a challenging backdrop.
Revenues were driven by modest loan demand, improvement in mortgage banking business, while disappointing trading and investment banking along with flattening of yield curve acted as headwinds. On the cost front, increased investments in technology to boost digital offerings and initiatives to expand into newer areas are expected to result in a slight rise in expenses. Additionally, credit quality has remained solid. Per the latest Earnings Preview, overall earnings for the finance sector, of which banks constitute the major part, are projected to rise 8.2% year over year. Also, revenues are expected to climb 6.4%. Let’s take a look at four banks that are scheduled to announce second-quarter results tomorrow. Huntington Bancshares HBAN is set to report results before the opening bell. The Zacks Consensus Estimate for earnings is pegged at 32 cents, indicating 6.7% growth from the year-ago reported figure. Also, the consensus estimate for sales of $1.18 billion suggests 5.5% rise. With a Zacks Rank #3 (Hold) and Earnings ESP of -2.82%, the chances of the company beating the Zacks Consensus Estimate in the quarter are low this time around. (You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.) Modest loans growth is likely to benefit the bank’s net interest income. Fee income is expected to rise driven by expected growth in bank’s credit and debit card revenues and higher mortgage banking fees. Also, costs are likely to be under control. (Read more: What's in the Cards for Huntington's Q2 Earnings?) SVB Financial Group SIVB, slated to announce results after market close, is expected to witness growth in earnings and revenues. The consensus estimate for revenues of $787.4 million implies growth of 19.5%. Further, the consensus estimate for earnings is $4.98, 12.7% higher than the prior-year reported figure. With a Zacks Rank #3 and Earnings ESP of +1.61%, the chances of the company beating the Zacks Consensus Estimate in the quarter are high this time around. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here The bank’s top line is expected to improve driven by rise in fee income and acquisition of Leerink. Also, the Zacks Consensus Estimate for average interest earning assets of $57.1 billion represents rise of 9.1% year over year. Nevertheless, expenses are likely to jump due to its continued spending on technology systems overhaul and investment in franchise. (Read more: Fee Income, Leerink to Aid SVB Financial Q2 Earnings). Cullen/Frost Bankers, Inc. ( CFR Quick Quote CFR - Free Report) is slated to announce results before market open. The company is projected to record an increase in earnings and revenues. The Zacks Consensus Estimate for earnings of $1.73 suggests improvement of 2.4%. The consensus estimate for sales of $364.6 million indicates a rise of 13.1%. With a Zacks Rank #3 and Earnings ESP of -0.15%, chances of Cullen/Frost Bankers beating the Zacks Consensus Estimate are low. It has a decent earnings surprise history. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters. United Bankshares, Inc. UBSI is expected to witness growth in earnings while revenues are likely to decline in the to-be-reported quarter. The Zacks Consensus Estimate for earnings of 64 cents suggests year-over-year growth of 1.6%. The consensus estimate for sales of $183.3 million indicates a decline of 1%. With a Zacks Rank #4 (Sell) and Earnings ESP of 0.00%, chances of United Bankshares beating the Zacks Consensus Estimate are low. It has a decent earnings surprise history. The company surpassed the Zacks Consensus Estimate in one and matched in two of the trailing four quarters.
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