Loan growth, better spreads fail to impress U.S. bank investors

NEW YORK (Reuters) – US banks are beginning to see benefits expected to rise in interest rates, including four of the largest lenders exceeded quarterly analysts’ expectations Friday for rising loan prices without Having to pay a lot more for deposits.

But JPMorgan Chase & Co shares (JPM.N), Wells Fargo & Co (WFC.N), Citigroup Inc (CN) and PNC Financial Services Group Inc. (PNC.N) declined during the afternoon. Investors want to see even better results and hear the most basic view of executives, analysts say.

“The bank’s stock had to be offset,” Shannon Stemm, an analyst with Edward Jones, told Reuters. “They were very optimistic about stock prices as investors were thrilled by rising interest rates and the prospect of regulatory reform, but the outlook is more fundamentally mixed.”

JPMorgan, for example, said that loan growth, deposit growth and increased financial margin, which measures the difference between the cost of financing and the income generated by these funds. In general, profits increased 13 percent.

However, management expects the interest margin has increased by 4 billion this year, compared with a forecast of 4.5 billion, due to the combination of mortgage adjustment, weak income related markets and downlink ” Pressure “to 10 years.

As JPMorgan shares fell 1.1% to $ 92.05 $ Keith Horowitz, a bank equity analyst for Citigroup, said investors were disappointed by the darker outlook and had “a price high share price.”

The Federal Reserve has raised rates three times since the second quarter of last year, the latest increase was in June.

Rising rates are generally good for banks, but because they did not have mixed movements in short and long term rates, lenders have not seen sales increase faster than expected by investors.

Wells Fargo, Citigroup and PNC announced a one-year increase in their loans. Wells and PNC said the split between what they pay for deposits and loans increased costs through higher rates. All of them hit average earnings per share analysts.

However, Wells Fargo’s turnover has lived up to expectations, and analysts have questioned leaders of the biggest expenses during a conference call. Its shares fell 1.2 percent to $ 54.94.

The bank is less dependent on consumer deposits, which do not require higher rates as soon as institutional clients.

Much of the growth of loans comes from credit cards that do not carry balance sheets, which means they do not earn interest on these loans.

Chief Financial Officer John Gerspach encouraged analysts to think not only of the income directly related to these loans, but other activities generated by the underlying customers.

“But we like the business we’ve developed,” he said. “We prefer to lend growth since no growth of loans.”

Citi shares fell 0.7 percent to $ 66.54.

PNC showed particular strength in commercial lending, and net profit increased 5 percent in deposit costs increased less than the returns they have achieved.

The bank plans to extend its corporate loans, and adherence to its previous forecast that its loan portfolio increase to half of the figures for the full year.

But even this positive outlook generates some surprise. Its shares fell 0.4 percent in the afternoon business to $ 126.78.

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