When US banks start reporting fiscal first-quarter results next week, what their executives say about deposit levels and liquidity will arguably be of greater interest to investors than any full-year profit guidance.
(Bloomberg) — When US banks start reporting fiscal first-quarter results next week, what their executives say about deposit levels and liquidity will arguably be of greater interest to investors than any full-year profit guidance.Â
As the market reaction to Western Alliance Bancorporation’s delay in revealing its deposits data suggests, nerves remain frayed following the crisis of confidence in regional banks sparked off by last month’s collapse of Silicon Valley Bank. Â
According to Bloomberg estimates, JPMorgan, Citigroup and Wells Fargo — all reporting next Friday — could have seen deposits shrink sequentially by a total of $63 billion for the quarter, a decline of 1.4% on average.Â
With concerns rising over the banking sector’s exposure to commercial real estate, investors will also be keeping an eye on how asset quality is faring at Pittsburgh-based PNC Financial Services Group. Â
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Monday: Tilray Brands (TLRY US), which reports post-market, continues to grapple with declining adult-cannabis use and a subdued US craft-beer market, TD Cowen analysts say. Versus the previous quarter, the company is expected to post smaller year-on-year contractions in EPS and revenue. Delayed shipments could offset the benefits from a full quarter of owning Montauk Brewing, which Tilray acquired in November.
Tuesday: Used-vehicle dealer CarMax (KMX US) could report a 21% fall in fourth-quarter revenue, its second double-digit percentage decline in a row, according to consensus. That said, analysts at RBC Capital Markets see a potential top-line beat in the pre-market report, citing a rebound in retail prices and sales trends.Â
Wednesday, ESG in Focus: Yet to turn a profit since its initial public offering in October 2021, Rent the Runway (RENT US) is facing intense competition from Urban Outfitters’ Nuuly, which also capitalizes on consumers’ desire to keep wardrobes fresh without the obvious environmental impact associated with fast fashion. Nuuly has already gone on to amass more subscribers than Rent the Runway, which is expected to report a loss of $0.51 per share for the fourth quarter, down from $0.60 a year earlier, when it posts results after market close. Still, Bloomberg Intelligence sees Rent the Runway meeting its goal of doubling its customer base in 2025, with sales growing 15% in the quarter, driven by low-double-digit active subscriber growth.Â
Thursday: Delta Air Lines (DAL US) will continue to exhibit strong top-line performance in the first fiscal quarter with 47% revenue growth, buoyed by premium and overseas markets, Bloomberg Intelligence says. Rising costs, however, will keep the carrier’s operating margins below pre-pandemic levels. Delta is the first major airline to finalize a post-pandemic deal with its pilots’ union and BI expects labor cost per available seat mile to increase more than 30% as a result of the new contract. Delta is scheduled to give its results before the bell.  Â
Friday: Signs of asset quality deterioration are a risk for PNC Financial Services Group (PNC US), Piper Sandler analysts warn. Consensus sees the bank setting aside an additional $308 million in loan-loss provisions in the first quarter, compared to the $208 million released in the same period a year ago. Yet PNC is expected to hold up well to heightened scrutiny over bank deposits; according to data compiled by Bloomberg, the rate of funds leaving PNC’s balance sheet quarter-on-quarter is expected to slow to less than a percentage point, compared to about 1.5% a year ago. PNC’s ability to rein in expenses will also be assessed in its pre-open earnings report, with consensus seeing non-interest costs rise by about 6% from a year ago, the first increase in three quarters.Â
- JPMorgan (JPM US), Citigroup (C US), Wells Fargo (WFC US) and BlackRock (BLK US) could give a more comprehensive picture of how empty downtown office buildings are hitting real estate lenders and investors. Management could also discuss how they are dealing with rising competition for deposits. Though some bigger names saw deposits swell in the flight to safety following the regional banking turmoil, more money is flowing out of deposits into money-market funds. Deposits at the largest 25 commercial banks fell by $90 billion in late March, according to Bloomberg Intelligence, and banks are likely to have to raise rates to compete.
–With assistance from Natalie Lung and Crystal Chui.
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