Just passing along a few highlights from KBW’s latest analysis of Q4 earnings for the 131 banks they cover (emphasis theirs):
Banks continue to beat or meet expectations. For our sample of 131 banks, on an operating-per-share basis, 65 banks (50%) beat consensus estimates, 16 (12%) met consensus estimates, and 50 (38%) missed consensus estimates. This compares to 4Q09 and 3Q10, when 46% and 35% of the banks missed consensus estimates, respectively.
Operating EPS gained 49% y/y and 4% q/q. Operating EPS increased 53% y/y and 5% q/q for the large-caps while smid-cap banks posted growth of 48% y/y and 3% q/q.
Profitability metrics improve with the median ROE at 5.42%, increasing 284 bps y/y and 13 bps q/q. The median ROA is 64 bps, gaining 30 bps y/y and 2 bps q/q.
Banks continue to scale back lending in 4Q10, with average loans falling 1% y/y and remaining flat q/q.
We’re not sure how to square that last note with other reports that commercial and industrial loans have rebounded (though tepidly), except to assume the difference is accounted for by fewer loans to small businesses and households.
Three more highlights:
Credit improvement continues, as the median [net charge-off] ratio decreased 4 bps q/q and 22 bps y/y to 1.12%. The median [non-performing asset] ratio fell 10 bps q/q to 3.33% and remained flat y/y.
Banks with TARP post weaker results. Median credit ratios for the 44 banks in our sample with TARP remain weaker than industry medians at 1.61% for the NCO ratio and 4.66% for the NPA ratio. These banks posted significantly weaker than industry profitability with a median ROE of 1.40% and median ROA of 0.16%. Also, average loans fell at a faster rate, declining 3% y/y and 1% q/q.
2011 estimate changes post earnings results are mixed, with 34% of the estimates for the banks that reported moving higher, 30% unchanged, and 36% getting cut. The New England banks that reported thus far have seen the largest percentage of 2011 estimate increases at 54%, with an average increase of 9%.
So (deep breath) … earnings are improving, banks who haven’t yet returned Tarp money are underperforming those who have, large caps are besting smaller banks, credit quality is better, and lending remains weak.
Full report in the usual place.
Related links:
The (still weak) US lending recovery – FT Alphaville
More on the bank business lending recovery – FT Alphaville