大型银行业：收入与信贷方面乏善可陈WFC的效率前景正在改善.docx

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1、12 August 2020Global ResearchLarge Cap BanksUBS Financials Conference: few surprises on rev/credit; efficiency outlook improving for WFC?EquitiesAmericasFinancial ServicesFocus on navigating challenging revenue outlooks and credit qualityWe participated in investor meetings with JPMorgan (Neutral),

2、Wells Fargo (Sell), Bank of America (Neutral), and Regions (Buy) at the UBS Financial Services Virtual Conference earlier this week. The meetings reinforced the view expressed in recent research that revenue is likely to remain challenged, but that credit quality trends could eventually point to mor

3、e material loan loss reserve releases than expected (see Revenue outlook to remain challenging; is credit a silver lining?). In addition, we were encouraged by a clear commitment from Wells Fargo to begin right sizing the cost base, though NII headwinds are likely to persist.Saul Martinez Analyst +1

4、-212-713 2491Robert Placet Analyst +1-212-713 3735Frieda Gonzalez Associate Analyst +1-212-713 4086Wells Fargo (Sell): could good news be coming on expenses?We came away feeling that management is committed to taking clear and decisive actions to tackle an elevated cost base. Visible actions to impr

5、ove operating efficiency are likely to be disclosed in 2H20, with the benefits beginning to accrue in 2021. The company believes expenses will decline in 2021. Though this view is consistent with our forecast (expenses down 2% in 2021), we acknowledge that Wells Fargo has an opportunity to improve s

6、ubstantially over a multi-year period. Nonetheless, we continue to think that a continued low rate environment leads to additional NII declines in 2021.JPMorgan/Bank of America (both Neutral): business momentum remains solidJPMorgan expressed confidence that NII resilience will persist due to deposi

7、t growth and a resumption of credit card loan growth in 2H20. The company will also continue managing expenses in a challenging revenue backdrop. Our meetings with Bank of America focused on digital banking. The companys investments in digital capabilities have left it well positioned as digital eng

8、agement has accelerated during the pandemic.Regions (Buy): NII pressure to persist, but good signs on creditDespite protection from hedges, balance sheet compression and lower reinvestment rates likely pressure NII beyond 3Q20. However, we also came away feeling that Regions is pro-actively managing

9、 credit risk, and disclosures in its conference presentation showing sizable declines in loans in deferral periods in July 2020 were encouraging (see slide 6). Expense management could also help offset NII pressures and that fee momentum might be more resilient in 2H20 than for some peers.RatingMark

10、etCap (bn)Current PricePrice TargetTotalReturnP/EPrice/BVPrice/TBVROEROTCE202120222Q2020202Q2020202021202220212022JPMorganNeutral313.0102.91000.6%11.99.81.341.301.671.6010.7%12.2%13.4%15.5%Bank of AmericaNeutral231.926.723-11.3%14.010.40.960.941.341.296.6%8.4%9.1%11.5%Wells FargoSell103.825.221-15.0

11、%14.99.40.650.640.790.774.2%6.4%5.1%7.6%RegionsBuy11.411.91314.3%10.87.80.720.701.071.046.4%8.4%9.5%12.2%Figure 1: Valuation comparables of large cap banks participating in our conferenceSource: FactSet, UBS estimates. Price data as of 8/12/2020This report has been prepared by UBS Securities LLC. AN

12、ALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 12. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should con

13、sider this report as only a single factor in making their investment decision.Deferrals have declined significantly in July. In their slide deck released for conference meetings, Regions updated deferral statistics through the end of July. Notably, commercial loan deferral balances declined 77% vers

14、us June 30 levels and consumer loans declined 32%. The total deferral rate is down to just 2% of total loans (vs. 6% at 6/30). Regions believes that borrowers took a defensive stance when initially deciding to enter into forbearance and are now making payments as agreed.Dividend levels are sustainab

15、le. Regions feels comfortable with the current quarterly dividend of $0.155/share. Under the Feds dividend cap, the third quarter 2020 common dividend cannot exceed the trailing 4 quarter average net income before preferreds. If the policy is renewed to 4Q20, we estimate that Regions needs to earn a

16、 minimum net income (before preferreds) of $259m in 3Q20, or EPS (after preferred dividends) above $0.24 (we currently estimate $350m and $0.33/share for reach respectively) to maintain its currently quarterly dividend per share of $0,155.Regions continues to work to be as efficient as possible. Aft

17、er the incorporation of Ascentium, Regions core quarterly operating expenses run at $860-870 mn. Management emphasized continuous improvement programs are helping the company optimize its cost structure. Future efficiency improvements could come from continued branch consolidation (with more custome

18、rs engaging via digital/mobile banking Regions can become less reliant on branches), the optimization of non-branch real estate, and third party vendor costs. CFO David Turner did acknowledge that reaching a mid-50% efficiency ratio in the current interest rate environment will be difficult.Valuatio

19、n Method and Risk StatementWe use a regression of risk-adjusted ROEs to P/BV multiples for banks in our coverage universe, including JPMorgan, Bank of America, Wells Fargo and Regions. More specifically, we derive a target price to book value multiple based on the existing relationships between risk

20、 adjusted ROEs and price to book value and multiplying it by the estimated 1Q21E book value per share to derive a 12-month price target. Risks to our price targets include: (1) greater credit quality deterioration than expected; 2) continued deterioration in macroeconomic conditions, including sever

21、e increases in unemployment and the absence of an economic recovery; (3) the competitive environment for loans; (4) a more severe impact from regulation on revenue streams and/or operating costs; (5) the environment for capital returns; (5) the impact of lower interest rates on net interest margins.

22、Required DisclosuresThis report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS.For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical p

23、erformance information; certain additional disclosures concerning UBS research recommendations; and terms and conditions for certain third party data used in research report, please visit . The figures contained in performance charts refer to the past; past performance is not a reliable indicator of

24、 future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission. UBS acts or may act as principal in the debt securities (or in related derivative

25、s) that may be the subject of this report. This recommendation was finalized on: 14 August 2020 09:13 PM GMT. UBS has designated certain Research department members as Derivatives Research Analysts where those department members publish research principally on the analysis of the price or market for

26、 a derivative, and provide information reasonably sufficient upon which to base a decision to enter into a derivatives transaction. Where Derivatives Research Analysts co-author research reports with Equity Research Analysts or Economists, the Derivatives Research Analyst is responsible for the deri

27、vatives investment views, forecasts, and/or recommendations.Analyst Certification:Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the v

28、iews expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner, including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or

29、views expressed by that research analyst in the research report.UBS Investment Research: Global Equity Rating Definitions12-Month RatingDefinitionCoverage1IB Services2BuyFSR is 6% above the MRA.49%32%NeutralFSR is between -6% and 6% of the MRA.39%30%SellFSR is 6% below the MRA.13%20%Short-Term Ratin

30、gDefinitionCoverage3IB Services4BuyStock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event.1%1%SellStock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.1%

31、6b 6G 7, n, 16,20BAC.NJPMorgan Chase & Co,4 6b-6c-4增20JPM,NRegions Financial Corp4 6a6b 7-16-20RF.NWells Fargo & Company1-2,4,5,6a, 6b, 6c, 7.13,16,20 WFC.NSource: UBS. All prices as of local market close.Ratings in this table are the most current published ratings prior to this report. They may be

32、more recent than the stock pricing dateUBS Securities LLC is acting as manager/co-manager, underwriter, placement or sales agent in regard to an offering of securities of this company/entity or one of its affiliates.1. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the und

33、erwriting or placement of securities of this company/entity or one of its affiliates within the past 12 months.4. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity or one of its affiliates.5. UBS AG, i

34、ts affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services from this company/entity within the next three months.6a. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are

35、being, or have been, provided.6b. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided.6c. This company/entity is, or within the past 12 months has been, a client of UBS

36、 Securities LLC, and non-securities services are being, or have been, provided.7. Within the past 12 months, UBS Securities LLC and/or its affiliates have received compensation for products and services other than investment banking services from this company/entity.13. UBS AG, its affiliates or sub

37、sidiaries beneficially owned 1% or more of a class of this companys common equity securities as of last months end (or the prior months end if this report is dated less than 10 days after the most recent months end).16. UBS Securities LLC makes a market in the securities and/or ADRs of this company.

38、20. Because this security exhibits higher-than-average volatility, the FSR has been set at 15% above the MRA for a Buy rating, and at -15% below the MRA for a Sell rating (compared with 6/-6% under the normal rating system).Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report. For a complete set of disclosure statements associated with the companie