JP Morgan Chase (JPM : NYSE : US$48.73)
Wells Fargo (WFC : NYSE : US$37.48)
TD Bank* (TD : TSX : $81.05),
Royal Bank of Canada* (RY : TSX : $60.11)
Bank of Montreal* (BMO : TSX : $62.59)
U.S. bank Q1/13 reporting season commences this Friday with JP Morgan and Wells Fargo.
Similar to prior quarters, Canaccord Analyst Mario Mendonca says pay close attention to credit trends, trading results, commercial & industrial (C&I) loan growth and net interest margins. Q4/12 was the ninth consecutive quarter we saw an increase in U.S. C&I loans since the crisis. Weekly data from the Federal Reserve Board suggests that U.S. C&I loans at the large domestic banks grew 1.3% QoQ in Q1/13.
Last quarter, the U.S. credit picture remained strong despite macroeconomic concerns. In Q4/12 for the 11 U.S. banks Mendonca tracks, total PCLs were US$9.1 billion, down from US$9.3 billion in Q3/12. PCLs decreased in the quarter largely due to higher reserve releases by JPM, mostly offset by lower releases at Citigroup (C) and Bank of America (BAC). Net charge-offs, non-performing loans, delinquency trends and management
commentary all continue to suggest that credit losses will decline in the U.S. JPM and WFC’s results on April 12 will provide the first look into C&I loan growth from the U.S. banks this quarter.
Strong U.S. C&I loan growth bodes well for TD and Bank of Montreal particularly. JPM’s results will also provide the first indication of the sustainability of the trading environment.
While calling Royal Bank’s trading quarter by referencing the U.S. results has not worked consistently, Mendonca believes it is appropriate to look to the U.S. investment banks for broad trends.
- Canadian Banks Forecast (amp2012.com)
- Big banks: ‘Succession is always of interest,’ analyst says of pending changes (macleans.ca)