Banks Flashcards
ALLY FINANCIAL INC (ALLY)
Digital financial services company known for its auto financing and online banking. It differentiates itself with a strong digital presence and customer-centric innovation. A specific strength is its robust auto loan portfolio. A notable weakness is its exposure to auto loan defaults.
Upgrading to Neutral to reflect the recent widening in spreads following the company warning of worse-than-expected asset quality trends during the Barclays Financial Services conference. ALLY has more exposure to subprime consumers with one-third of its auto loan portfolio originated to <660 FICO score customers during 2023. Expect that profitability has troughed and should improve over the next 6-12 months driven primarily by lower deposit costs
Baa3/BBB-/BBB-
Banking - Americas
$8.66bn in index across 10 issues
AMERICAN EXPRESS COMPANY (AXP)
Global payments company offering credit card services, merchant acquisition, and travel-related services. It stands out with its premium customer base and strong brand loyalty. A specific strength is its high credit quality. A notable weakness is its sensitivity to economic cycles.
AXP spreads rarely trade wide of JPM so view flat to JPM levels as attractive. While a slowing economy is a concern, recent management commentary from the Barclays conference suggests credit remains very strong (recall AXP caters to higher income consumers that are less likely to be affected by higher-for-longer interest rates and inflation) and consumer spending patterns have been stable relative to 2Q. AXP’s peer-leading capital generation (CET1 build of +3.4%/+3.7% in 2024E/25E) provides a sizable buffer protecting capital in any downside scenarios.
A2/BBB+(Pos)/A
Banking - Americas
$29.89bn in index across 25 issues
BANK OF AMERICA CORP (BAC)
One of the largest financial institutions globally, providing a wide range of banking, investment, and financial services. It is well-positioned with a diversified business model and strong retail banking presence. A specific strength is its solid capital base. A notable weakness is its exposure to regulatory changes.
A1/A-/AA-
Banking - Americas
$173.18bn in index across 65 issues
BANK OF MONTREAL (BMO)
Major Canadian bank with operations in personal and commercial banking, wealth management, and investment banking. It differentiates itself with a strong North American presence and focus on digital banking. A specific strength is its solid capital position. A notable weakness is its exposure to the Canadian housing market.
Aa2/A+/AA
Banking - Americas
$14.50bn in index across 13 issues
BANK OF NEW YORK MELLON CORP/THE (BK)
Global investments company providing investment management and investment services. It is uniquely positioned as a leading custodian bank with significant assets under custody. A specific strength is its stable fee-based revenue model. A notable weakness is its exposure to market volatility.
Trades tight inside the index and hiqh quality GSIBs
A1 *-/A-/A+
Banking - Americas
$25.75bn in index across 34 issues
BANK OF NOVA SCOTIA (BNS)
aka Scotiabank, is a leading Canadian bank with a strong international presence, particularly in Latin America. It differentiates itself with a diverse geographic footprint and focus on digital transformation. A specific strength is its strong capital base. A notable weakness is its exposure to emerging market risks.
A2/A-/AA-
Banking - Americas
$16.10bn in index across 17 issues
CANADIAN IMPERIAL BANK OF COMMERCE (CM)
One of Canada’s largest banks, offering a wide range of financial products and services. It is known for its strong domestic retail banking operations and growing U.S. presence. A specific strength is its solid capital position. A notable weakness is its exposure to the Canadian economy.
A2/A-/A
Banking - Americas
$11.20bn in index across 12 issues
CAPITAL ONE FINANCIAL CORPORATION (COF)
Diversified bank specializing in credit cards, auto loans, and banking services. It stands out with its data-driven approach and strong digital capabilities. A specific strength is its large and diverse credit card portfolio. A notable weakness is its high exposure to consumer credit risk.
COF spreads have underperformed peers widening ~20 bps over the past quarter and now appear more fairly valued relative to peers. However, maintaining a Neutral recommendation to reflect uncertainty associated with weaker US employment trends, the DFS acquisition and Moody’s review for downgrade, and the CFPB’s late fee rule (5-6% revenue headwind, if implemented). Prefer higher-rated MTB, which should be a bigger beneficiary of the QTD decline in interest rates in 3Q24.
Baa1 *-/BBB/A-
Banking - Americas
$26.55bn in index across 22 issues
CHARLES SCHWAB CORPORATION (THE) (SCHW)
Leading provider of brokerage, banking, and financial advisory services. It differentiates itself with a strong focus on customer service and low-cost investment options. A specific strength is its robust asset management business. A notable weakness is its exposure to interest rate fluctuations. Third highest quality name in AMs/Brokers/Exchanges
Net new asset growth is tracking 5-10% below 3Q24 consensus according to the monthly activity reports. While the company likely made little progress in reducing structurally senior debt, higher client margin balances should drive higher net interest revenue. Shareholder returns are likely to remain modest until the tier 1 leverage ratio improves another 180bp to 6.8-7.0%. Spreads look fair flat to A corps when factoring in conservative leverage, leading wealth management platform, and commitment to reducing non-recourse debt and building capital.
A2/A-/A
Banking - Americas
$19.12bn in index across 21 issues
CITIBANK NA (C)
Global bank offering a wide range of financial services, including consumer banking, credit, corporate and investment banking, securities brokerage, and wealth management. It differentiates itself with a strong international presence and extensive global network. A specific strength is its diversified revenue streams. A notable weakness is its exposure to regulatory and geopolitical risks.
A3/BBB+/A
Banking - Americas
$111.22bn in index across 55 issues
COMERICA INCORPORATED (CMA)
Financial services company primarily focused on commercial banking, retail banking, and wealth management. It stands out with its strong presence in Texas, California, and Michigan. A specific strength is its solid credit quality and disciplined expense management. A notable weakness is its concentration in commercial loans, which can be sensitive to economic cycles.
Baa1(Neg)/BBB-/BBB+(Neg)
Banking - Americas
$2.05bn in index across 3 issues
DISCOVER BANK (DFS)
Digital banking and payment services company known for its credit card offerings, personal loans, and banking products. It differentiates itself with a strong brand and customer loyalty in the credit card market. A specific strength is its high credit quality and strong fee-based income. A notable weakness is its reliance on consumer spending and economic conditions.
Baa2/BBB-+/BBB++
Banking - Americas
$6.15bn in index across 8 issues
FIFTH THIRD BANCORP (FITB)
Regional bank holding company providing a range of financial services, including commercial banking, branch banking, consumer lending, and wealth management. It is well-positioned with a strong presence in the Midwest. A specific strength is its disciplined credit risk management. A notable weakness is its exposure to regional economic conditions.
Baa1(Neg)/BBB+/A-
Banking - Americas
$9.50bn in index across 12 issues
First Citizens BancShares Inc (FCNCA)
Provides wide range of retail and commercial banking services. Strong presence in the U.S. with over 500 branches across 30 states, and it is known for its stability and long-term strategic approach. Personalized customer service, catering to both individual and business clients. Robust asset base, exceeding $200 billion. Significant exposure to commercial real estate loans.
Baa2(Neg)/BBB+(Neg)
Banking - Americas
$0.40bn in index across 1 issues
GOLDMAN SACHS GROUP INC/THE (GS)
Leading global investment banking, securities, and investment management firm. It differentiates itself with its strong advisory and underwriting capabilities. A specific strength is its robust capital markets business. A notable weakness is its exposure to market volatility and regulatory scrutiny.
A2/BBB+/A
Banking - Americas
$109.50bn in index across 45 issues
