Big Banks that Overcame Low Rates in 1Q — and the Ones that Didn't
April 23, 2015 7:30 AM
High-profile hits and misses in the first quarter showed the difficulty of finding revenue growth in a period of low interest rates. Some big banks surprised analysts by tapping into fresh revenue streams, while others lost ground.
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JPM Trades Up
Huge trading numbers at the country's largest bank got most of the attention in the first quarter, but Chief Executive Jamie Dimon also has to be pleased with the bank's 11% growth in commercial lending .
Image: Bloomberg News
Citi Wins at Home
North American consumer banking played a big role in Citigroup's unexpectedly strong quarter . CEO Michael Corbat's years-long efforts to cut branches and focus on a few key cities helped push profit for that unit up by 12% year over year.
Image: Bloomberg News
Wells in a Holding Pattern
Wells Fargo's income fell year over year , but no worse than analysts expected, and loan growth, mortgages and fee income showed encouraging signs. Still, CFO John Shrewsberry acknowledged that some lines of business will have little relief until rates rise.
B of A's Revenue Dips
The Charlotte, N.C., megabank reported its best quarterly profit in more than a year but left some analysts wondering where earnings growth will come from . Its revenue slid by 6%, and CEO Brian Moynihan's big cost-cutting push ended last year.
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U.S. Bancorp Waits on 'Tsunami'
Perennial top performer U.S. Bancorp surprised some analysts by showing margin deterioration in the first quarter, despite an overall increase in profit. CEO Richard Davis says he expects a "tsunami" of borrowing once rates rise.
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PNC's Margin Woes
PNC Financial Services Group's profit dipped slightly after its net interest margin tightened by more than 40 basis points in the past year. Overhead costs also rose as the bank spent on technology and infrastructure, investments that CEO Bill Demchak hopes will pay off later.
KeyCorp Adds Bit by Bit
Cost controls and smaller deals helped KeyCorp to a solid first quarter . CEO Beth Mooney's recent acquisitions, like the purchase of a tech-focused investment bank, have helped offset low loan yields, even if none has hugely added to revenue on its own.
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M&T and SunTrust Tap the Brakes
Both the Buffalo, N.Y.-based M&T and the Atlanta-based SunTrust reported slower commercial loan growth than the average for regionals, due in part to concerns that competitive underwriting terms are getting riskier.
Loans and Worries Grow for Comerica
The Dallas-based Comerica kept its foot on the gas, adding 7% to its loan book year over year, but many analysts were concerned about the bank's exposure to the energy sector, and wonder whether such rapid growth is sustainable with low oil prices.
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Regions, TCF Seek Fee Leverage
The Birmingham, Ala.-based Regions Financial, led by Grayson Hall, hit analysts' earnings targets despite a drop in deposit-account fees , while TCF Financial in Wayzata, Minn., missed. William Cooper, the CEO of TCF, said savvier customers have gotten better at avoiding overdrafts and other charges.
Citizens' Lending Push Pays Off
The $137 billion-asset Citizens Financial has been expanding its consumer lending to improve returns, and the strategy worked in the first quarter, as quarterly profit jumped by 26% . Royal Bank of Scotland continued to divest its ownership of Citizens, and now holds a stake of about 41%.
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Huntington Cuts Its Way Forward
The Columbus, Ohio-based Huntington Bancshares saw an 11% increase in profit , as costs fell and revenue rose. CEO Stephen Steinour has managed to push the company's efficiency ratio down despite tighter margins.
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