瑞信-美股-银行业-美国大型银行业Q4盈利预览-18-32页.pdf
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DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST
CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit
Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report
as only a single factor in making their investment decision.
8 January 2019
Americas/United States
Equity Research
Large Cap Banks
Large Cap Banks
4Q18 Earnings Preview
EARNINGS
Research Analysts
Susan Roth Katzke
212 325 1237
susan.katzke@credit-suisse.com
Adam Krasner, CFA
212 325 7116
adam.krasner@credit-suisse.com
Gerard Padilla
212 325 3579
gerard.padilla@credit-suisse.com
Past as Prologue for the Present? It's All
About the Forward Look
The CS Large Cap Bank group will begin reporting fourth quarter earnings on
Monday morning January 14
th
; Citigroup weighs in first. What to expect…
mixed fundamentals, seemingly well understood. Slower top line growth is
to be expected (moderate loan growth; limited net interest margin expansion;
weak mortgage banking; challenging market environment); operating leverage,
still very low credit costs and a greater benefit from share repurchases (the
silver lining to lower share prices) provide EPS support. All in, we forecast
~22% yr-to-yr EPS growth with a respectable ~14% average ROTE. More
important is the forward look, with earnings growth and ROTE prospects
tied to macro strength, market health and competitive positioning.
■ Large Cap Banks' 4Q18 EPS expected to increase 22% yr/yr but
decline 3% qtr/qtr (consensus similar, on average). Excluding the
benefit of tax reform, we note slower but still quite healthy growth, with
pretax income expected to increase 16% yr/yr (comparisons reflect
additional spending in 4Q17 post tax reform). With less of a market-related
revenue headwind, the Mid Cap Banks are expected to put up stronger
results, with consensus forecasting +27% yr/yr and 3% qtr/qtr EPS growth.
■ Some revenue growth, some operating leverage realization, low credit
costs and more valuable capital returns are driving comparisons.
Underpinning our +3% yr/yr and flattish qtr/qtr revenue growth forecast: (i)
flattish NIMs; modest sequential NII growth, (ii) no more than 1% sequential
quarter loan growth; slower deposit growth will manifest unevenly, from
both a volume and price perspective, and (iii) challenging capital markets
conditions: trading flat to down 5% yr/yr (down 15-20% sequentially);
investment banking down 13% yr/yr industrywide. We expect the Large
Cap Banks' efficiency ratios to average out at ~59% (ex. trust banks)
driving nearly 100bps of incremental improvement in 2018. With respect to
credit... our 4Q18 estimates embed ~20% sequentially higher credit costs—
modest, if any increase in net charge-offs with comparisons most impacted
by less loan loss reserve depletion/some additions.
■ What we're watching… (i) competitive dynamics--loan and deposit
pricing and the impact of the shape of the curve on liquidity deployment
and NIM prospects (we expect this will be a focus point on conference
calls); (ii) financing demand—C&I loan growth and capital markets
activity; (iii) the cost of market value weakness and volatility/capital
markets health--investment banking pipelines (underwriting pipelines and
strategic dialogue) and the health of the trading markets (will we see an
ability to monetize volatility in 1Q19); (iv) operating leverage/investment
spend; (v) credit quality migration, and (vi) regulatory reform—CCAR
and CECL in focus (2019 CCAR instructions due out at month end).
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