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Bank Stock Roundup: Q2 Earnings in Full Swing, Fifth Third Beats Estimates

Zacks Equity Research

Major banks which reported second-quarter 2019 results, over the last five trading days, managed to record decent bottom-line growth, driven by higher net interest income. In addition to the benefits from relatively higher interest rates, banks’ performance mirrored a marginal upswing in loans. This also led to positive price movement for most bank stocks, over the last five trading days.

However, fee income was disappointing, adversely impacted by weak capital markets. Also, an overall rise in non-interest expenses, due to high spending on technology and personnel, and other market development initiatives, was an undermining factor.

Nevertheless, banks continued with their restructuring and streamlining initiatives.



(Read: Bank Stock Roundup for the Week Ending May 10, 2019)

Important Developments of the Week

1. Fifth Third Bancorp FITB delivered a positive earnings surprise of 7.6% in second-quarter 2019. Adjusted earnings per share of 71 cents surpassed the Zacks Consensus Estimate of 66 cents. However, excluding certain one-time items, the bottom line came in at 57 cents, down 30.5% year over year. Increase in revenues, aided by expansion of margin and loan growth, was a key positive. Moreover, the company displays a strong capital position. However, escalating expenses, fall in fee income and provisions were undermining factors. (Read more: Fifth Third Q2 Earnings Top Estimates, Revenues Rise)

2. KeyCorp’s KEY second-quarter adjusted earnings of 44 cents per share came in line with the Zacks Consensus Estimate. Also, the figure was on par with the prior-year quarter level. Results were adversely impacted by lower non-interest income, decline in net interest margin (mainly due to flattening of yield curve), higher expenses and deterioration in credit quality. Nonetheless, a marginal increase in interest income, and decent loan and deposit growth acted as tailwinds. (Read more: KeyCorp's Q2 Earnings Match Estimates, Revenues Down)

3. Regions Financial Corporation RF reported June-end quarter adjusted earnings of 39 cents per share, in line with the Zacks Consensus Estimate. Results were up 14.7% year over year. Lower expenses and higher net interest income were the positive factors. Additionally, loans escalated. However, lower fee income, backed by reduced capital markets and mortgage banking income, were major drags. Additionally, elevated provisions were an undermining factor. (Read more: Regions Reports Q2 Earnings as Expected, Revenues Up Y/Y)

4. Recently, JPMorgan JPM completed the acquisition of InstaMed. The deal was inked by the bank in May to expand its reach into the lucrative U.S. healthcare payments market. Founded in 2004, Philadelphia-based InstaMed offers automated billing services linking hospitals and doctors’ offices with patients and insurers. The firm has nearly 300 employees and processed $94 billion worth of transactions last year. The deal, thus, complements JPMorgan’s huge corporate payments infrastructure, which processes approximately $6 trillion of payments on a daily basis. JPMorgan plans to offer InstaMed to its entire client base and will likely integrate it with its bill paying apps.

Price Performance

Here is how the seven major stocks performed:
 

Company

Last Week

6 months

JPM

1.9%

13.6%

BAC

3.2%

3.7%

WFC

4.5%

-2.3%

C

0.7%

13.0%

COF

5.8%

21.6%

USB

2.8%

11.8%

PNC

1.4%

14.5%



Over the last five trading sessions, Capital One Financial COF and Wells Fargo WFC were the major gainers, with their shares rallying 5.8% and 4.5%, respectively. Moreover, shares of Bank of America BAC have jumped 3.2%.

In the past six months, shares of Capital One Financial and PNC Financial have appreciated around 21.6% and 14.5%, respectively. Further, shares of JPMorgan have gained 13.6%.

What’s Next?

Over the next five trading days, performance of bank stocks will depend on the outcome of the Federal Open Market Committee (FOMC) meeting scheduled on Jul 30-31.

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Bank of America Corporation (BAC) : Free Stock Analysis Report
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
KeyCorp (KEY) : Free Stock Analysis Report
 
Wells Fargo & Company (WFC) : Free Stock Analysis Report
 
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
 
Regions Financial Corporation (RF) : Free Stock Analysis Report
 
Capital One Financial Corporation (COF) : Free Stock Analysis Report
 
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