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Major Banks Q1 Earnings: Key Predictions for KEY, BBT, BK

Zacks Equity Research
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Earnings season for banks has already begun and the results released so far by the big names reflect a decent performance. The results till now indicate higher revenues supported by improved loan balances, hike in interest rates and rebound in trading activities. However, lower mortgage income and dismal investment banking performance adversely impacted fee income to some extent.

On the cost front, the chance of a significant rise in expenses is low, though a marginal increase in expenses is expected to occur owing to efforts to digitize operations and investment in franchise. Notably, lower tax rates are projected to boost earnings.

Per the latest Earnings Preview, overall earnings for the major banks in the first quarter are projected to jump 19.2% year over year. This compares favorably with prior quarter’s earnings growth of 2.7%.

Therefore, this seems to be the right time to add a few bank stocks in case they beat earnings estimates.

Let’s check the factors that are likely to influence the following major banks slated to report first-quarter results on Apr 19, before the opening bell.

KeyCorp’s KEY earnings and revenues are expected to improve in the to-be-reported quarter. The Zacks Consensus Estimate for earnings is 38 cents, reflecting year-over-year increase of 18.8%. Further, the Zacks Consensus Estimate for sales of $1.56 billion indicates 4.1% growth from the prior-year quarter.

Driven by loan growth and higher interest rates, the bank’s interest income will likely increase. The consensus estimate for net interest income (NII) (tax equivalent basis) of $948 million for the to-be-reported quarter reflects 2% increase on a year-over-year basis.

On the other hand, fee income growth for this Zacks Rank #3 (Hold) stock is likely to be muted due to expectations of lower mortgage banking fees, trust and investment services income, and investment banking fees. (Read more: Will Loan Growth, Lower Costs Aid KeyCorp Q1 Earnings?)

KeyCorp Price and EPS Surprise

 

KeyCorp Price and EPS Surprise | KeyCorp Quote

Another major bank, BB&T Corporation BBT is expected to report a marginal decline in NII owing to lower net interest margin expectation. The Zacks Consensus Estimate for NII of $1.62 billion for the to-be-reported quarter shows 1.6% decline on a sequential basis.

Fee income performance is likely to be disappointing as well with rise in insurance fees providing some relief. Total non-interest income is projected to witness a 2.4% fall as the Zacks Consensus Estimate for the first quarter is $1.20 billion. (Read more: Can Loan Growth & Insurance Fees Aid BB&T Q1 Earnings?)

Notably, the Zacks Consensus Estimate for earnings for the to-be-reported quarter is 92 cents, which reflects year-over-year rise of 24.3%. The consensus estimate for sales of $2.83 billion indicates 1.7% growth from the prior-year quarter.

BB&T carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BB&T Corporation Price and EPS Surprise

 

BB&T Corporation Price and EPS Surprise | BB&T Corporation Quote

The Bank of New York Mellon Corporation’s BK fee revenues are projected to provide major support in first-quarter 2018 earnings. The Zacks Consensus Estimate for fee revenues of $3.16 billion reflects 5.1% growth on a year-over-year basis.

Additionally, given the improvement in loan balances and rising interest rates, BNY Mellon is expected to register a modest increase in net interest revenues, which is likely to be partially offset by the reduced size of balance sheet. (Read more: Why is an Earnings Beat Likely for BNY Mellon in Q1?)

For this Zacks Rank #3 stock, the Zacks Consensus Estimate for earnings of 97 cents reflects year-over-year growth of 21.3%. Further, the consensus estimate for sales is $4.05 billion for the to-be-reported quarter, reflecting an improvement of 6.2% year over year.

The Bank of New York Mellon Corporation Price and EPS Surprise

 

The Bank of New York Mellon Corporation Price and EPS Surprise | The Bank of New York Mellon Corporation Quote

Check back later our full write-up on earnings releases of these bank stocks.

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BB&T Corporation (BBT) : Free Stock Analysis Report
 
KeyCorp (KEY) : Free Stock Analysis Report
 
The Bank of New York Mellon Corporation (BK) : Free Stock Analysis Report
 
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