Banks to post a mixed Q2 in an uncertain economic backdrop - Wedbush

Axos Financial

30/06/2022 16:22

** Wedbush sees bank earnings for Q2 as a mixed bag with
outlooks clouded by recession fears and higher loan loss
provisions 
    ** "We are expecting headwinds on the fee income side in 2Q;
including weak mortgage banking fees, pressure on capital
markets revenue" - Brokerage
    ** Wedbush downgrades several bank stocks, citing challenges
due to the macro environment, and says rating cut reflects its
more "cautious stance"
    ** SVB Financial Group  SIVB.O  swoons after the cut amid
broader market weakness to lead declines in the S&P 500 Banks
index  .SPXBK  which is down more than 2% on Thursday
 urn:newsml:reuters.com:*:nL1N2YH1OD
    ** Brokerage expects loan growth to be good in the quarter
but sees a slowdown in the back half of the year, particularly
in the commercial real estate sector 
    ** Sees revenue also hit by lack of capital raising and M&A
deal activity 
    ** Brokerage adds looming recession has heightened headwinds
related to loan growth and credit costs for bank stocks 
    ** While bank profits are often boosted by rising rates they
are also very sensitive to economic fluctuations with concerns
about bad loans or slowing loan growth in a recession 
    ** Chooses Citizens Financial Group  CFG.N  and Fifth Third
Bancorp  FITB.O  as its top picks among regional banks 
    ** S&P 500 Financials Index  .SPSY  has shed ~18.2% YTD
while the S&P 500 Banks Index  .SPXBK  is down ~24.1% over the
same period    
    
 Company                           New Rating    Old Rating 
 Axos Financial  AX.N              Neutral       Outperform 
 East West Bancorp  EWBC.O         Neutral       Outperform 
 Huntington Bancshares  HBAN.O     Neutral       Outperform 
 KeyCorp  KEY.N                    Neutral       Outperform 
 SVB Financial Group  SIVB.O       Neutral       Outperform 
 Western Alliance Bancorp  WAL.N   Neutral       Outperform 
 Webster Financial Corp  WBS.N     Neutral       Outperform 
 
    

 (Reporting by Manya Saini in Bengaluru)
 ((Manya.Saini@thomsonreuters.com;))