The earnings season seems to have gotten off to a decent start with banks reporting improved earnings and revenues. Results till now reflect higher revenues supported by improved loan balances and hike in interest rates. However, lower mortgage income and dismal investment banking performance impacted fee income to some extent.
The last three months of 2018 witnessed heightened volatility. This likely resulted in a rise in client activity, which is expected to lead to decent numbers for trading business. However, seasonality, fears of global economic slowdown and rise in interest rates hurt investment banking revenues in the to-be-reported quarter.
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.
Per the latest Earnings Preview, overall earnings for the finance sector in fourth-quarter 2018 are projected to rise 20.3% year over year. Also, revenues are expected to climb 2.8%.
Earnings releases are coming in thick with Huntington Bancshares Incorporated HBAN, SVB Financial Group SIVB, First Financial Bankshares FFIN and East West Bancorp EWBC scheduled to report on Jan 24.
Let’s take a look at what can be expected from these four banks’ fourth quarter and 2018 earnings.
The Zacks Consensus Estimate for Huntington’s earnings is pegged at 31 cents, reflecting 19.2% improvement from the last-year quarter.
Also, the consensus estimate for sales is $1.16 billion, 4.6% higher than the prior-year quarter. Rise in loans, along with a favorable interest rate environment, is likely to benefit the bank’s net interest income. Fee income is expected to remain stable from investment banking business, partially offset by higher advisory revenues on escalated volume of closed deals in the fourth quarter.
Nevertheless, management remains focused on expense management. Thus, costs are likely to remain under control. (Read more: Will Loan Growth Support Huntington Q4 Earnings?)
The bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Huntington Bancshares Incorporated Price and EPS Surprise
Huntington Bancshares Incorporated Price and EPS Surprise | Huntington Bancshares Incorporated Quote
The Zacks Consensus Estimate for SVB Financial’s quarterly revenues of $691.1 million reflects year-over-year growth of 26.6%. Also, the consensus estimate for earnings is $4.69, 62.3% higher than the prior-year quarter.
The bank’s top line is expected to improve on the back of higher fee income as well as interest income. Also, the consensus estimate for average earning assets of $56.1 billion reflects 14.6% growth from the prior-year quarter. Further, higher service charge on deposits due to rising balances and backed by increase in credit card-related consumer loans during the to-be-reported quarter, the company’s credit card fees are expected to rise.
Costs are likely to rise due to its continued spending on technology systems overhaul and investment in franchise. (Read more: Loans, Fee Income to Aid SVB Financial's Q4 Earnings)
SVB Financial currently carries a Zacks Rank #2 (Buy).
SVB Financial Group Price and EPS Surprise
SVB Financial Group Price and EPS Surprise | SVB Financial Group Quote
The earnings of First Financial are projected to register year-over-year growth in fourth-quarter 2018. Its Zacks Consensus Estimate for earnings of 58 cents reflects an increase of 34.9% from the prior-year quarter.
Also, the Zacks Consensus Estimate for sales is $97.1 million, which reflects a year-over-year rise of 16.7%.
The stock currently carries a Zacks Rank of 3.
First Financial Bankshares, Inc. Price and EPS Surprise
First Financial Bankshares, Inc. Price and EPS Surprise | First Financial Bankshares, Inc. Quote
East West Bancorp is projected to register year-over-year growth in fourth-quarter 2018 earnings and revenues.
Its Zacks Consensus Estimate for earnings of $1.17 reflects a year-over-year improvement of 34.5%. Also, the Zacks Consensus Estimate for sales of $407.3 million reflects year-over-year growth of 11.6%.
The stock currently carries a Zacks Rank #3.
East West Bancorp, Inc. Price and EPS Surprise
East West Bancorp, Inc. Price and EPS Surprise | East West Bancorp, Inc. Quote
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