【出版时间及名称】：2010年4月美国金融行业研究报告
        【作者】：OPPENHEIMER
        【文件格式】：pdf
        【页数】：42
        【目录或简介】：
Spring Is Here
SUMMARY
First-quarter results for the major commercial and investment banks clearly show
that the credit recovery is very much in place. The net inflow of new problems
declined from a peak of $53B in 2Q09 and 3Q09 to $39B in 4Q09 and (on a
comparable basis) to $30B in 1Q10. Moreover, a broad range of early delinquency
statistics indicates that this improvement trend is likely to continue in coming
quarters. Although loan volumes continue to run down and fee income is under
some pressure, our bottom line is that the swing in credit costs will outweigh this by
a wide margin and that the stocks still generally remain undervalued relative to the
broader market. We continue to recommend JPM, BAC, MS, WFC and LAZ.
KEY POINTS
n Total pre-provision earnings in 1Q10 were very strong at $51B versus $25B in
the prior quarter and a trailing-four-quarter average of $44B. The strong
performance was driven in particular by strong trading profits. Excluding trading,
pre-provision earnings were roughly stable.
n For the nine major global trading houses, we estimate that 1Q trading profits
were about $58B versus a trailing-four-quarter average of $40B. Perhaps
surprisingly, the current quarter's results are roughly on track with the long-term
trend. We continue to believe that "trading" revenues are more stable than
generally believed.
n With this report we are doing away with the term "normalized" earnings. Instead,
we are shifting our valuation methodology to drive off our specific 2012 earnings
estimates, which we now establish in this report. We believe 2012 will be
roughly when normal loan losses should be reached and that this gives a better
account for companies like USB and WFC that should have better than average
growth.
n Based on these 2012 estimates and a return to historical average relative
multiples, we still believe investors in BAC, JPM and WFC have potential for
22-28% annual returns between now and 2012.
Spring Is Here!
While even just three quarters ago there was a good deal of debate among bank analysts
and economists whether the shoots were "green" or "brown" (remember that?), there no
longer seems any real debate that spring is here in full, with green leaves and flowering
trees everywhere. Most important credit quality is improving, with a substantial decrease
in the rate of inflow of new problem loans. Pretty much across the board declines in early
delinquencies point to further improvements in coming quarters. Loan volumes may still
be very soft, but bank revenues have held up generally better than expected as the net
interest margin has generally firmed up and trading revenues are much more robust than
most would have expected. Add a good performance on the cost front and it all leads to a
good performance on pre-provision earnings in 1Q10, and that confirms that there should
be major earnings leverage as credit quality recovers further.
Most of these facts are now becoming generally visible and less and less in dispute.
Thus, the key question is shifting from "Will there be a recovery" to "Where in the recovery
are we now and how much of the good news is already discounted?" That is the focus of
this report, and we will try to show that the market is still climbing its wall of worry about
the recovery and that there are probably still excess returns to be earned over the next 2-3
years as bank earnings revert to a "normalized" level. Specifically, we believe the big
national footprint banks can still generate at least 20% annualized returns over the next
two or three years.
Credit Quality Trumps All
In Exhibit 1 we show our composite industry model, which summarizes the aggregate
trends of the companies in our coverage. One should remember that even though it is
only five companies, these five account for about 65% of the assets in the US banking
system, so it captures the aggregate trends pretty well.