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SVB Financial's (SIVB) Top Line Benefits From Global Expansion

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SVB Financial SIVB is expected to continue to benefit from a solid balance sheet position and impressive global expansion strategy. Moreover, the company’s focus on improving non-interest income is likely to aid growth.

Analysts seem to be optimistic regarding SVB Financial’s earnings growth potential. The Zacks Consensus Estimate for its 2021 earnings has been revised upward by 19.6% over the past 30 days. Thus, the company currently sports a Zacks Rank #1 (Strong Buy).

So far this year, shares of SVB Financial have gained 44.4% compared with the industry's growth of 35.9%.

Looking at fundamentals, its net loans witnessed a compound annual growth rate (“CAGR”) of 22.8% over the last five years (2016-2020). Also, net interest income (NII) and deposits witnessed a CAGR of 17% and 27.2%, respectively, over the same time frame. The uptrend for loans, NII and deposits continued in first-quarter 2021.

Moreover, the company has been undertaking efforts to expand globally. While its U.K. and Asia operations seem to be growing, the businesses in Canada and Germany are expected to further boost revenues. International core fee income witnessed a five-year (ended 2020) CAGR of 27%.

Notably, the acquisition of SVB Leerink in 2019 continues to support financials. Also, in January 2021, SVB Financial inked a deal to acquire Boston Private, which is expected to further strengthen its private bank and wealth-management offerings. The deals along with the acquisition of the debt-investment business of WestRiver Group in December 2020 are expected to support its position as one of the foremost providers of financing solutions to innovative companies.

Further, SVB Financial boasts a solid balance sheet. Its current liquidity position seems sufficient to help it meet debt obligations in the near term, even if the economic situation worsens.

However, near-zero interest rates are likely to continue putting pressure on the company’s net interest margin in the near term. Also, elevated operating expenses might hurt the bottom line to an extent.

Other Stocks to Consider

KeyCorp KEY witnessed an upward earnings estimate revision of 16.8% for the current year over the past 60 days. Its share price has increased 39.1% so far this year. The company currently carries a Zacks Rank #2 (Buy).

Over the past 60 days, Wells Fargo & Company WFC witnessed an upward earnings estimate revision of 43.1% for 2021. Its shares have gained 51.5% so far this year. The company currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, the Zacks Consensus Estimate for First Republic Bank’s FRC current-year earnings has been revised 7.2% upward. The company’s shares have gained 27.1% year to date. It currently carries a Zacks Rank #2.

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