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What to Expect From USB, MTB and NTRS in Q3 Earnings?

Zacks Equity Research
Updated

The earnings season had a decent start with the banking giants reporting improved earnings and revenues so far. Though the results have not been able to impress investors markedly, hopes are high that the industry will soon regain momentum.

The banks that released earnings reported higher revenues supported by improved loan balances and higher interest rates. However, lower mortgage and trading revenues impacted the fee income to some extent.

Per the latest Earnings Outlook, earnings for the major banks, accounting for nearly one-third of the sector’s market cap in the S&P 500, are up 7.2% from the prior-year quarter while revenues are 1.9% higher.

Earnings releases are coming in thick with U.S. Bancorp USB, M&T Bank Corporation MTB and Northern Trust Corporation NTRS scheduled to report on Oct 18, before the opening bell.

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Let’s have a look at what can be expected from these three Major Regional Banks when they report third-quarter earnings.

U.S. Bancorp is expected to report year-over-year improvement in revenues supported by higher net interest income (NII) on the back of loan growth. Some support is expected from the Mortgage Banking business as well. The Zacks Consensus Estimate for mortgage banking revenues is $215 billion, relatively stable year over year.

Further, the Zacks Consensus Estimate for U.S. Bancorp’s current-quarter earnings of 88 cents reflects a 4.5% rise year over year.

However, the bank’s aim to be technologically advanced should keep costs high. The stock currently carries a Zacks Rank #4 (Sell). (Read more: U.S. Bancorp to Report Q3 Earnings: What's in Store?)

U.S. Bancorp Price and EPS Surprise

U.S. Bancorp Price and EPS Surprise | U.S. Bancorp Quote

M&T Bank Corporation’s third-quarter earnings are expected to be $2.40, reflecting 12.8% improvement from the last-year quarter.

Also, the Zacks Consensus Estimate for sales is $1.4 billion, 5.7% higher than the prior-year quarter. Rise in loans along with favorable interest rate environment is likely to benefit the bank’s NII. Fee income is likely to remain stable due to lower volume of M&A and equity issuance activities during the quarter, offset by expectations of higher trust income.

M&T Bank’s investments in operational infrastructure and technology is likely to keep expenses escalated in the to-be-reported quarter. (Read more: Why an Earnings Beat is Likely for M&T Bank in Q3?)

The bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

M&T Bank Corporation Price and EPS Surprise

M&T Bank Corporation Price and EPS Surprise | M&T Bank Corporation Quote

Northern Trust Corporation’s Zacks Consensus Estimate for current-quarter earnings is projected to be $1.12, reflecting 3.6% growth from the prior-year quarter.

The bank’s main revenue component — C&IS Trust, Investment and Other Servicing Fees — is expected to improve in the to-be-reported quarter. The consensus estimate for this fee of $493 million reflects a year-over-year rise of 9.3%.

However, the Zacks Consensus Estimate for average earning assets of $111.5 billion reflects a marginal decline from the year-ago quarter. (Read more: Can Trust Income Drive Northern Trust's Q3 Earnings?)

Northern Trust currently has a Zacks Rank of 4.

Northern Trust Corporation Price and EPS Surprise

Northern Trust Corporation Price and EPS Surprise | Northern Trust Corporation Quote

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U.S. Bancorp (USB) : Free Stock Analysis Report
 
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Northern Trust Corporation (NTRS) : Free Stock Analysis Report
 
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Zacks Investment Research