Big Questions for the Biggest Banks in 1Q Earnings
April 8, 2015 1:18 PM
As the largest banks get set to report their first-quarter earnings, investors and analysts will be looking for clarity on developments from the last three months. Here are the key storylines for each major bank.
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Bank of America's Cost and Capital Issues
Brian Moynihan says Bank of America is on the road to recovery, but shareholders will be looking for updates on expenses which have fallen, but not as fast as some would like and the Fed's issues with the bank's capital plan .
Image: Bloomberg News
JPM Tries to Cut the Fat
Cost cutting has become a key focal point for JPMorgan Chase. The company is giving itself until 2017 to hit a 55% efficiency ratio, and stakeholders will likely quiz CEO Jamie Dimon and CFO Marianne Lake about their progress toward trimming $2 billion in expenses from the retail bank and nearly $3 billion from the corporate and investment bank.
Image: Bloomberg News
Wells Fargo Pressured on Margins, Fee Income
Wells Fargo CEO John Stumpf rarely disappoints, but the San Francisco lender faces continued pressure to expand net interest income and fee revenues. Investors will also be looking for hints on Wells' energy exposure and the possibility of future reserve releases.
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New Feathers in Citi's Cap, But Costs Remain an Issue
After years of being cast as banking's black sheep, Citigroup is starting to look like a model for its too-big-to-fail peers. CEO Michael Corbat can brag about Citi's wins last month like scoring higher than any other megabank on the Federal Reserve's stress test and landing a co-branding deal with Costco but analysts are likely to quiz him about progress on cost cuts.
Image: Bloomberg News
Bumpy Road Ahead for Amex?
Citi's partnership with Costco is a loss for American Express, which had been the retailer's exclusive card provider for 16 years. And that wasn't the only blow CEO Kenneth Chenault suffered this past quarter: Amex lost a five-year court battle with the Justice Department to prevent merchants from driving customers to cheaper card networks.
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Polishing a Rusty Earnings Machine
Bruce Van Saun, CEO of the newly public Citizens Financial, has committed to boosting earnings and efficiency after years of underperformance as a division of Royal Bank of Scotland. Now Citizens is stretching into higher-return consumer credit , and analysts will be closely watching what this push yielded in the first quarter.
Image: Bloomberg News
A Test of U.S. Bancorp's Optimism
U.S. Bancorp has been such a strong performer for so long that analysts will be looking past the first quarter which is expected to be a little slow due to an unusually cold winter for hints about the bank's longer-term economic outlook. CEO Richard Davis will likely be quizzed about whether he's rethinking the company's optimistic forecasts for this year.
Image: Bloomberg News
Deal Fog Still Covers M&T and Hudson City
M&T Bank's performance has long been overshadowed by its efforts to close the Hudson City deal, and this quarter should be no different. M&T CEO Robert Wilmers can expect to field plenty of questions about the deal after an unexpected setback announced this week forced the two companies to delay the merger yet again.
PNC's Chasing New Loans, But Only So Far
PNC Financial's William Demchak can expect queries on the company's cost-cutting goals and loan growth, but stakeholders may also wonder about the company's decision to cut off financing to some coal-mining firms an important business segment for the Pittsburgh lender after being challenged by environmentalists.
KeyCorp Tries to Meet Raised Expectations
The test for KeyCorp CEO Beth Mooney in the first quarter will be whether investment-banking and debt-placement fees hold their own. Those fees were unexpectedly strong in the fourth quarter , and analysts and shareholders will want to see if they slipped back down in the first quarter.
