It's been a busy week for financials. Aside from earnings from BofA and beats from both Charles Schwab (SCHW) and Citi, banks and credit card companies reported March credit summaries on Tuesday.
Overall, net charge offs increased month-over-month at most institutions, including Capital One Financial (COF), Bank of America (BAC) J.P. Morgan (JPM), and Citigroup (C), while Discover Financial Services (DFS) saw NCOs flat and American Express (AXP) recorded a decline.
Morgan Stanley's Betsy Graseck and Manan Gosalia have a review of the metrics out, in which they note: "Loan growth improved at AXP/COF/DFS, growing 1% m/m on avg, after two consecutive weak months (-3% m/m in Feb/Jan). We expect this rebound from weather related weakness will continue through 2Q14, with 2H14 spend picking up from improving consumer balance sheets. Mixed results on NCOs. NCOs increased m/m at C/JPM, declined at AXP, and came in relatively flat at BAC/COF/DFS. On average, NCOs increased 6bps m/m, in-line with seasonality of up 4bps. Early stage delinquencies were relatively flat and in-line with seasonal trends on average. Total delinquencies declined at 5 out of 6 issuers, but the average decline of 7bps was a touch lighter than the typical seasonal decline of -11bps."
They boosted their first-quarter EPS estimate on Capital One by 8 cents on its lower NCOs, and also noted that further gains for retail sales provide positive momentum for the current quarter: "March retail sales (ex auto, gas and building materials) rose +0.9% m/m, better than MSe +0.5%. Feb sales were also revised upward (+0.5% vs. prior +0.3%). Expect spending accelerates in 2Q14."
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