The earnings season seems to have gotten off to a decent start with banks reporting rise in earnings and revenues despite a challenging economic environment.
Results till now reflect higher revenues supported by slight improvement in loan balances and pickup in mortgage banking business on the back of lower rates. Further, fee income showed strength with support from solid momentum in consumer-facing businesses.
However, net interest margin, which is the backbone for banks’ top line, remained subdued in the quarter due to decline in interest rates and flattening of the yield curve. Also, increased investments in technology to boost digital offerings and initiatives to expand into newer areas resulted in a slight rise in expenses.
Per the latest Earnings Outlook, overall earnings for the finance sector, of which banks constitute a major part, are projected to rise 5.1% year over year. Also, revenues are expected to climb 7.1%.
Let’s take a look at four banks that are scheduled to announce third-quarter results tomorrow.
Citizens Financial Group CFG, slated to announce results before market open, is expected to have witnessed growth in earnings and revenues. The Zacks Consensus Estimate for revenues of $1.63 billion implies growth of 4.2% from the year-ago reported number. Further, the consensus estimate for earnings is 96 cents, indicating 3.2% rise.
We cannot conclusively predict an earnings beat for Citizens as it doesn’t have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.
It has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.05%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The bank’s top line is expected to have improved driven by rise in fee income. Also, the Zacks Consensus Estimate for average interest earning assets of $146.6 billion suggests rise of 3.1% year over year. Nevertheless, expenses are likely to have jumped due to its continued spending on technology systems overhaul. (Read more: Soft Interest Income Rise to Mar Citizens Q3 Earnings)
Citizens Financial Group, Inc. Price and EPS Surprise
Citizens Financial Group, Inc. price-eps-surprise | Citizens Financial Group, Inc. Quote
State Street Corporation STT is set to report results before the opening bell. The Zacks Consensus Estimate for earnings is pegged at $1.04, indicating 25.1% fall from the year-ago reported figure. Also, the consensus estimate for sales of $2.86 billion suggests 3% decline.
The company has a Zacks Rank #3 and Earnings ESP of -1.02%.
(You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.)
Soft loans growth and decline in interest rates are expected to have hurt State Street. Also, fee income is likely to have been affected by foreign exchange trading volatility. Costs might have remained flat sequentially. (Read more: Low Rates, Muted Lending to Mar State Street Q3 Earnings)
State Street Corporation Price and EPS Surprise
State Street Corporation price-eps-surprise | State Street Corporation Quote
IBERIABANK Corporation IBKC is slated to announce results before market open. The company is expected to have recorded an increase in earnings, while revenues are likely to have declined.
The Zacks Consensus Estimate for earnings of $1.79 suggests improvement of 2.9%. The consensus estimate for sales of $312.3 million indicates a slight fall.
It has a Zacks Rank #4 and Earnings ESP of -1.31%.
IBERIABANK Corporation Price and EPS Surprise
IBERIABANK Corporation price-eps-surprise | IBERIABANK Corporation Quote
Ameris Bancorp ABCB is expected to have witnessed growth in earnings and revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for earnings of 95 cents suggests growth of 4.4% from the year-ago reported number. The consensus estimate for sales of $213.8 million indicates a rise of 65.5%.
It has a Zacks Rank #4 and Earnings ESP of +4.21%.
Ameris Bancorp Price and EPS Surprise
Ameris Bancorp price-eps-surprise | Ameris Bancorp Quote
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.50% per year. So be sure to give these hand-picked 7 your immediate attention.
See them now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
State Street Corporation (STT) : Free Stock Analysis Report
Ameris Bancorp (ABCB) : Free Stock Analysis Report
IBERIABANK Corporation (IBKC) : Free Stock Analysis Report
Citizens Financial Group, Inc. (CFG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research