Fee Income, Loans to Aid SVB Financial (SIVB) Q3 Earnings
SVB Financial Group SIVB is slated to announce third-quarter 2020 results on Oct 22, after market close. During the quarter, while the overall lending scenario was weak, modest demand for commercial loans (constituting major part of its loan portfolio) offered some support.
The Zacks Consensus Estimate for average interest-earning assets of $76.4 billion suggests 23% growth from the prior-year quarter. However, SVB Financial’s net interest income is expected to have been hurt in the to-be-reported quarter owing to lower interest rates. Thus, the consensus estimate for the same is pegged at $521 million, relatively stable year over year.
Near-zero interest rates are expected to have dampened the company’s net interest margin.
Other Factors at Play
Non-Interest Income: SVB Financial’s growth in deposit service charges is likely to have been decent in the to-be-reported quarter, driven by a substantial increase in deposit balances. The consensus estimate for the same is $22.7 million, indicating a 1% rise on a year-over-year basis.
Also, consensus estimate for lending-related fees is pegged at $11.7 million, indicating slight growth from the prior-year quarter. Likewise, the Zacks Consensus Estimate for commissions of $14.8 million indicates a 19.5% increase.
Further, given a rebound in M&As during the quarter, investment banking fees are expected to have improved in the third quarter. The Zacks Consensus Estimate of $84 million for the same suggests a substantial year-over-year surge.
The consensus estimate for foreign exchange fees is pegged at $37.6 million, which indicates 6.6% decline. Further, given the weakness in consumer activities, there has been a decline in credit card-related consumer loans in the third quarter. Thus, SVB Financial’s credit card fee is expected to have declined from the prior-year quarter. The Zacks Consensus Estimate for the same of $21.6 million indicates fall of 28.4%.
So, non-interest income is likely to have improved from a year ago. The consensus estimate for the same is pegged at $319 million, suggesting an increase of 8.5%.
Credit Quality: After having built substantial reserves in the first half of 2020 to combat the coronavirus-induced economic slowdown, SVB Financial is likely to have recorded a modest rise provision for credit losses in the third quarter.
Also, the Zacks Consensus Estimate for total non-performing assets of $151 million suggests a surge of 43.8% year over year. Further, the consensus estimate for total non-performing loans is pegged at $175 million, which indicates a jump of 66.7%.
What the Zacks Model Unveils
Our proven model shows that SVB Financial has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for SVB Financial is +2.11%.
Zacks Rank: The company currently carries a Zacks Rank #3.
SVB Financial Group Price and EPS Surprise
The Zacks Consensus Estimate for earnings of $5.46 per share has been revised 37.2% upward over the past 30 days. Also, the figure indicates a rise of 6% from the year-ago reported number. Further, the consensus estimate for sales is pegged at $928.5 million, which suggests growth of 14%.
Other Bank Stocks to Consider
Here are a few other bank stocks that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.
Huntington Bancshares HBAN is set to release earnings figures on Oct 22. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +3.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hilltop Holdings Inc. HTH is slated to report quarterly numbers of Oct 22. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +21.64%.
BankUnited, Inc. BKU is scheduled to announce quarterly results on Oct 28. The company has an Earnings ESP of +13.29% and currently carries a Zacks Rank of 3.
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SVB Financial Group (SIVB): Free Stock Analysis Report
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