Bank Stock Roundup: Q4 Earnings In Full Swing; RF, CMA, COF Beat Estimates
Zacks Investment Research | Jan 23, 2020 08:42PM ET
Despite a lower interest rate environment, banks that announced fourth-quarter 2019 results over the last four trading days reported decent numbers. This was largely driven by strong fee income growth, which was backed by improvement in capital markets revenues, rise in mortgage banking fees and resilient consumer banking.
Further, modest loan growth (mainly attributable to consumer and real estate loan portfolios) and rise in deposit balances acted as a catalyst, while net interest margin mostly contracted. Rise in operating expenses, mainly owing to high spending on technology and personnel, and business restructuring initiatives, was a headwind. Also, provisions for credit losses recorded a rise.
Nonetheless, guidance offered by banks reflect continued pressure on margins while marginal rise in loan demand is expected to offer support to net interest income. Moreover, banks’ efforts to diversify revenues and restructuring initiatives undertaken over the past years are likely to aid profitability in 2020.
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