Key themes from earnings calls 2Q 2017

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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.
EY - Percentage change in revenues from 2Q 2016

 

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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.

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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.

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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.

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For more information about 2Q 2017 earnings calls, download the full report.

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