Key themes from earnings calls 2Q 2017
Revenues grow in the US, reflecting the benefit of higher short-term interest rates.
- Financial performance trends in 2Q 2017 were mixed, compared to 2Q 2016.
- Of 32 banks included in this analysis, only 10 reported lower expenses from 2Q 2016.
- 13 banks saw return on average equity drop from 2Q 2016 levels.
Differentiated investments in innovation continue amid an ongoing focus on expense discipline.
- Expense performance in 2Q 2017 was mixed, but management plans continued investment.
- The innovation agenda is a primary reinvestment priority with a focus on differentiation.
Lending is not growing at robust rates, but banks are not willing to sacrifice credit quality in exchange for growth.
- Almost two-thirds of the banks reported increased net loan balances from the end of 2Q 2016.
- Growth rates were weak, exceeding 5% at only five banks.
- Management prefers to focus on customers that can meet strict underwriting criteria rather than chasing potentially higher-risk volume growth.
Management is cautiously optimistic about the outlook, as legacy headwinds ease and capital levels improve.
- Capital levels are strong.
- Banks pointed to progress in shoring up balance sheets and resolving crisis-related weaknesses.
- Credit quality continued to improve, as evidenced by lower cost of credit and reduced levels of nonperforming loans.