The Q1 earnings season has gotten off to a relatively soft start, with banks reporting disappointing results amid coronavirus concerns, which prompted them to build reserves for combating economic slowdown.
Results so far reflect lower net interest income (NII) on the back of declining rates despite a decent overall lending scenario. As expected, net interest margin — one of the major indicators of banks’ profitability — contracted during the quarter, largely due to lower interest rates and flattening of the yield curve.
Increased investments in technology to boost digital offerings, business streamlining efforts and initiatives to expand into newer areas resulted in marginally higher operating expenses. Nonetheless, fee income showed some strength, driven by improvement in the mortgage banking business and strong market performance.
Per the latest Earnings Preview, overall earnings for the finance sector, in which banks constitute an important part, are projected to decline 24.2% year over year. The sector recorded earnings growth of 7.3% in fourth-quarter 2019. Nevertheless, revenues are expected to climb 2.4% from the prior-year quarter.
Let’s take a look at five mid-sized banks that are scheduled to announce first-quarter results this week.
Comerica (CMA - Free Report) , slated to announce quarterly results on Apr 21 before market open, is expected to have recorded a decline in both earnings and revenues. The Zacks Consensus Estimate for earnings of 77 cents per share implies a plunge of 63% from the year-ago reported number.
Similarly, the consensus estimate for revenues of $752.3 billion indicates 10.9% fall from a year ago. The same for NII of $508 million suggests 16.2% year-over-year fall.
The chances of Comerica beating the Zacks Consensus Estimate are low this time, as it doesn’t have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
It has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of -31.41%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Northern Trust (NTRS - Free Report) is also set to report quarterly results on Apr 21 before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $1.45 per share, indicating a 2% decline from the year-ago reported figure.
However, the consensus estimate for sales of $1.54 suggests 3.9% growth. The consensus estimate for total C&Is Trust, Investment and Other Servicing Fees of $556 million indicates a 3.9% rise, and the same for Foreign Exchange trading profits of $70 million implies a 5.7% year-over-year jump.
Similar to Comerica, the chances of Northern Trust surpassing the Zacks Consensus Estimate for earnings in the first quarter are low, as it has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Moreover, Fifth Third Bancorp (FITB - Free Report) is scheduled to announce quarterly results before the market opens on Apr 21. The company is expected to have recorded a decline in earnings and revenues. The Zacks Consensus Estimate for earnings of 23 cents suggests a decrease of 63.5% from the prior-year reported figure.
Also, the consensus estimate for sales of $1.89 billion indicates a 13.3% decline from the year-ago reported figure. Specifically, the consensus estimate for NII of $1.18 billion suggests 10.2% rise from the prior-year quarter, while the same for non-interest income of $708 million indicates a 35.7% decrease.
It has a Zacks Rank #5 and Earnings ESP of -41.56%.
Huntington Bancshares (HBAN - Free Report) , set to announce quarterly results on Apr 23 before the market opens, is expected to have recorded a year-over-year decline in earnings but marginal revenue growth in the to-be-reported quarter. The Zacks Consensus Estimate for earnings of 11 cents per share suggests a plunge of 65.3% from the year-ago reported number.
The consensus estimate for sales of $1.15 billion indicates a slight year-over-year rise. However, the same for NII of $772 million suggests 5.1% fall from the prior-year quarter.
It has a Zacks Rank #3 and Earnings ESP of -27.46%.
SVB Financial (SIVB - Free Report) is slated to report quarterly results on Apr 23, after the market closes. Similar to other banks, the company’s earnings and revenues are likely to have declined in first-quarter 2020. The Zacks Consensus Estimate for earnings of $3.09 suggests a decrease of 43.2% from the year-ago period.
Also, the consensus estimate for sales of $770.9 million indicates 2.8% fall from the prior-year level. The consensus estimate for NII of $525 million suggests a 2.4% year-over-year rise and the same for non-interest income of $279 million indicates a marginal decrease.
It has a Zacks Rank #5 and Earnings ESP of -15.86%.
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