FINANCIALS: Bank of America (BAC AA1/A+/AA) - Q4 Results
Jan-16 14:15
Bank of America (BAC AA1/A+/AA) - Q4 Results
Solid beat, upbeat guidance - marginally positive for spreads
- Net interest income at $14.36bn is up 2.8% QoQ, 3% vs Q3 23 and back up near its peak, which was in Q3 2023. NII Expected to grow to $15.5-15.7bn in Q4 2025
- Commission and fee income grew 4.6% QoQ and 19%vs Q4 23. Asset management and advisory fees stand out as good performers. All other segments solid. Market making income was -0.8bn lower QoQ at 2.5bn.
- Non-Interest expenses were +1.9% vs Q3 and -5.3% vs Q4 23.
- CET1 increases 0.1% vs Q3 to 11.9%. CET1 capital and RWA up very marginally QoQ, with distributions and adjustments close to net income, which was +38bps of RWA.
- Provision expense falls, which is nice following the increases in 2024. NPL's rise slightly to 0.55% and LLR was 13bps.
- RoTE was 12.9%, a nice increase from 11.3% in Q3. OpInc/RWA was 0.05% lower at 1.65%.
Valuation: While all the US Bank names in EUR trade close together, considering the rating, core business risk and operating results, BAC looks a little on the cheap side, especially >5y
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MNI: US NOV INDUSTRIAL PROD -0.1%; CAP UTIL 76.8%
Dec-17 14:15
- MNI: US NOV INDUSTRIAL PROD -0.1%; CAP UTIL 76.8%
- US OCT IP REV TO -0.4%; CAP UTIL REV 77.0%
- US NOV MFG OUTPUT +0.2%
BTP: Natixis Recommend 10s30s Steepeners
Dec-17 14:12
Natixis recommend 10s30s BTP steepeners.
- When it comes to rationale they point to “potential steepening by mid-January 2025 due to dynamic January issuance focused on longer maturities, historical seasonality showing an average steepening of 8bp, and a favourable 3-month z-score indicating attractiveness compared to other EGBs.”
US DATA: Autos Flatter Retail Sales, But Underlying Consumption Trends Robust
Dec-17 13:57
November's retail sales report showed a strong contribution to growth from the two single-largest retailing categories, with activity beyond those areas looking solid but less impressive.
- Motor vehicles/parts dealers (4-month best +2.6% M/M, just under 20% of total retail sales) and non-store retailers (i.e. online sellers, +1.8% M/M, 17% of retail sales) helped boost the overall retail sales reading to 0.7% M/M (0.5% prior, 0.1pp upward rev). Auto sales continue to rebound from a summer lull, with nominal readings boosted by stronger inflation in the category.
- Core measures were on the soft side of expectations: ex-autos/gas at 0.2% M/M (0.2% prior) and control group 0.4% (-0.1% prior).
- Multiple sectors saw M/M contraction, including notably food services/drinking places, the third-largest retail category (14% of total sales), a "discretionary" sector, and one of the only readthroughs into non-goods consumption: it shrank 0.4%, the first contraction in 8 months and the largest drop in 10.
- Breadth looks like an issue therefore, but the trend gains in consumption remain positive.
- Total retail sales are up 3.8% Y/Y, the highest reading since December 2023, with the 3M/3M annualized rate up 7.2% - a 20-month high.
- From a GDP perspective too, control group sales remain robust: up 4.3% Y/Y and 5.6% 3M/3M annualized, the latter of which is a rough proxy of real PCE goods growth.
- With retail sales growth more than keeping up with CPI, should help underpin real Q4 GDP growth projections, including the FOMC's estimates ahead of its SEP publication tomorrow.
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