We’re hoping that fourth quarter results will show a bottom for net interest income, and that a gradual recovery in fees will continue for Wells. Regarding expenses, management said it will give more details on the next call. After updating our projections with the latest results, we are decreasing our fair value estimate to $45 per share from $46.
Despite uncertainty regarding economic outlook and future credit developments, we are maintaining our fair value estimate for the wide-moat firm.
We plan to increase our fair value estimate to $112 for this wide-moat bank.
After updating our projections for the latest quarterly results, we decrease our fair value estimate to $68 per share from $71 per share.
This leaves the FOMC plenty of room to maintain rates at zero for some time, and the committee will not be likely to preemptively raise rates to combat inflation.
The Federal Open Market Committee maintains rates at zero and our current rate forecasts within our bank models remain.
After incorporating these results into our forecast, and after incorporating a 50% probability of Joe Biden being elected and instituting his proposed tax hike, we are lowering our fair value estimate to $28 from $30.
As we’ve long pointed out, JPMorgan remains arguably one of the strongest and highest quality franchises under our coverage, and this showed in second quarter results.
While results aren’t pretty, they remain better than some peers, and most importantly, Citi’s capital levels are holding up as the common equity Tier 1 ratio improved to 11.5%.
The pain continued for Wells Fargo in the second quarter, as the bank reported a net loss of $2.4 billion, or $0.66 per share.
Our key takeaway from the annual Federal Reserve test is that the banking system appears to be well-capitalized.
Future rate hikes will inevitably depend to some degree on the timing and magnitude of an economic recovery.
We're maintaining our call on the U.S. banks and will know a lot more by the second quarter.
We still think consolidation makes sense over the long term for the banking sector.
We don't think the Fed will be in any rush to raise rates, but so far its massive interventions appear to be working.
We examine the capital adequacy and the solvency of the U.S. financial system.
We have incorporated the latest rate cuts and expectations for lower fee income, leading us to a new fair value estimate for Citigroup of $72, down from our previous estimate of $79.
We slightly lowered our fair value estimate for this wide-moat firm after it reported weaker first-quarter earnings.
We have also incorporated the latest rate cuts and expectations for lower fee income, leading to a new fair value estimate for JPMorgan of $113, down from $117.
We're lowering our fair-value estimate for the wide-moat firm.
The wide-moat firm is preparing for loan losses after weak results.
After an in-depth reassessment, we still believe they're undervalued.
We’ve also raised our fair value uncertainty rating to high.
With rates cut to zero, investors should be seriously watching and considering bank stocks as this plays out.
We expect an additional rate cut at the Fed's March meeting, and we are starting to see value emerge within traditional banking.
Regardless of the ultimate effect of the coronavirus on the economy, lower rates today will be a negative for bank profits.
We think a hold on rate movements is the base case for 2020.
Our latest research looks at how banks might be affected at this point in the economic cycle.
The wide-moat firm reported decent fourth-quarter results.
The firm reported stellar fourth-quarter results that were well-above consensus.
We plan to raise our fair value estimate for the narrow-moat firm.
It is clear that the wide-moat firm is still a work in progress, and we are lowering our fair value estimate.
It appears to us that we are now in a holding pattern for rates.
Bank dividend yields are set and look to stay that way.
We think a base case of “no more cuts for now” seems very reasonable.
We do not plan to make material changes to our fair value estimate for the narrow-moat financial services firm.
We are lowering our fair value estimate for the wide-moat firm.
The wide-moat firm had a solid third quarter, and we are increasing our fair value estimate to $114.
We still view at least one or two more cuts over the next year as the most likely outcome.
Scandals aside, the bank still has the pieces in place to compete effectively over the long term, and its shares currently look cheap.
We think the dividend payouts on these names are sustainable.
We are incorporating three rate cuts (including this one) through 2020 into our bank forecasts.
The list of potential partners among the large- and midsize regionals is becoming pretty sparse.
The release put slowing household spending in the spotlight, supporting the case that the economic picture remains mixed.
Commentary from the four largest U.S. banks has been positive, and fundamentals still look OK.
Profitability is improving, but growth isn't perfect yet.
We have maintained our underlying rate hike assumptions for our U.S. banking coverage, which includes no rate hikes in 2019.
Industry changes can affect moats and more.
We believe the U.S. banking system is much stronger and more stable than it was a decade ago.
The wide-moat bank is attempting to shake free from its scandals, and we think it could support double-digit dividend growth over the next several years.