Company Reports

CEO Dimon/CFO Lake reviewed adverse BREXIT impacts esp. knock-ons to the UK & EU economies. Viola Risk wants to know what the mounting probability of a failing European banking system will do to JPM’s counterparty risk exposures & the company’s actions to defend against negative effects. Importantly, what are the impacts to JPM’s stock price, funding spreads and regulatory systemic risk. We briefly review these factors. 

Solid quarter with all businesses contributing to earnings growth.  TD completed its operational review and posted a $349 million charge to pay for process redesign and business restructuring that should result in $600 million in annual cost savings starting 2017.

CIBC has reconfigured its corporate structure to be more responsive to retail and business banking clients.  It hopes to boost its performance measures and respond to on-line lending opportunities presented by emerging “FinTech” players. 

Bank of Montreal reported record net income for the quarter and year, with strong performance from residential mortgage, commercial lending, wealth management, and capital markets.  Acquisition of GE Capital Transportation Finance to provide further boost in 2016.

Solid loan growth in Canada and South America, but softer Asian business as Scotiabank changes customer strategy.  Operating efficiency improvements helping profitability improvements.

RBC posted record earnings of CAD 10 billion for 2015 with steady performance in its Canadian banking unit and good results in capital markets despite choppy conditions.  A deep deposit base, strong capital, and steady credit quality underpinned results. 

We believe Morgan Stanley is TLAC compliant from proactive debt issuance and management.  Liquidity position remains strong as deposits increase to 32% of total funding stack. 

ALLY’s transition from GM is continuing well.  Loan growth drove increased provisions. But strong non-GM originations and robust deposit growth are on track to set ALLY up for a return to shareholder payouts in next year’s CCAR. Sub-prime lending set to increase as restrictions relax.

With the gradual pickup in the European economy, BNP posted good results across its franchise.  While French banking was flat, other countries saw more growth and the personal finance business in emerging Europe had strong revenues.  Still, we remain cautious on the credit development though we are factoring in the positives more. BNP

Core business unit profitability exhibited positive progression as the company deals with non-core drag of non-strategic activities.  We believe the incoming new CEO Staley will be tasked with accelerating momentum across the divisions, especially investment banking and accelerate disposal of non-core assets.