Several major and regional US banks reported earnings last week. Going through the earnings call summaries on our platform, we picked up an interesting divergence in projected loan growth for the US, ranging from down 7% to up “mid to high single digits range.”
Loan growth is, of course, a core driver of bank earnings. Loan growth guidance is also a good leading indicator for the economy. Looking at Hudson Lab’s summary of JP Morgan’s (JPM) earnings call, the largest US lender is expecting “muted” loan growth beyond credit cards.
Other big banks are giving similarly weak guidance. For instance, Bank of America (BAC) is projecting modest “low to mid-single-digit loan growth”, while Wells Fargo is expecting a “slight decline” in average loans for the year. Deloitte is also forecasting overall loan growth in the sector to be “modest, at best.”
Amongst all this caution from the big players in the sector, there stands one bullish bank to give us a dose of optimism. Wintrust Financial (WTFC) is expecting “mid to high single digit” growth, continuing the trend from last year.
On the other end of the spectrum is KeyCorp (KEY), expecting loans to decline by 5-7% next year. However, as also noted in our earnings call summary, KeyCorp’s pessimistic guidance is in part due to efforts the management started making last year. The firm is reducing loans in order to “deemphasize credit-only and other nonrelationship businesses.”
Most other smaller banks are still expecting fairly low loan growth, with Wintrust being an outlier. Can Wintrust deliver this high loan growth in the current macroeconomic environment with high borrowing costs, and without deteriorating the quality of its loan portfolio? Only time will tell.
Here are some snippets of the guidance sections from our earnings call summaries:
JP Morgan (JPM):
Wintrust Financial (WTFC):