Login ID:
Partner Login
Contact Us : 7066511911

Financial Services Roundup: Market Talk

12 May 2018 8:20 am

The latest Market Talks covering Financial Services. Exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

1835 GMT - A chart published in the Bank of Canada's November Financial System Review led to some confusion over the proportion of mortgages up for renewal in Canada this year. The chart indicated that interest rates would reset on 47% of mortgages within a year from July 31 2017, the date data were collected. Some analysts took that to mean that roughly half of outstanding mortgages were up for renewal during that 12-month period. The Bank of Canada says its 47% figure included both fixed-rate mortgages that are up for renewal and variable rate mortgages. "Our staff estimates that roughly 25% of mortgages will be renewed this year, in line with historical norms," a BoC spokeswoman said. National Bank Financial's Matthieu Arseneau raised the issue in a report this week flagging "erroneous numbers" on mortgage renewals that had been circulating the media. (kim.mackrael@wsj.com; @kimmackrael)

1633 GMT - The National Rifle Association has sued NY Governor Cuomo and state financial regulators, accusing them of an unconstitutional "political blacklisting campaign" to stop banks and insurers from doing business with the organization. The group sued Friday in federal court in the northern district of NY. It follows a crackdown by the state on the NRA's "Carry Guard" insurance program, and other efforts to restrict financial firms from business relationships. NY officials have used "selective prosecution, backroom exhortations, and public threats with a singular goal-- to deprive the NRA and its constituents of their First Amendment right to speak freely about gun-related issues and defend the Second Amendment," the suit says. (leslie.scism@wsj.com)

1535 GMT - Commerzbank has done well to clean up its balance sheet but Credit Suisse isn't optimistic on the German company's revenue outlook and reiterates its underperform rating. Credit Suisse says Commerzbank's revenue targets are too ambitious due to pressure from competition in the PSBC Germany and Corporate Clients divisions. "Commerzbank has underperformed EU peers by 7% in the past 3 months so expectations are not high," Credit Suisse says ahead of first-quarter results on May 15. (anthony.shevlin@dowjones.com)

1526 GMT - Royal Bank of Scotland reaching unexpectedly low settlement with the U.S. over mortgage-backed securities mis-selling may have been partly thanks to legal arguments made by Barclays, says Don Hawthorne, litigation partner at Axinn, Veltrop & Harkrider. Barclays's assertions that FIRREA legislation intended to penalize fraud affecting federally insured financial institutions was being used in an overly broad fashion to punish foreign banks may have played a part in RBS's $4.9 billion agreement, says Mr. Hawthorne. "These two settlements are a meaningful shift in leverage," he says, noting that the Trump administration seems less keen on FIRREA as an "all-purpose fraud statute." FIRREA stands for Financial Institutions Reform, Recovery and Enforcement Act. (adam.clark@dowjones.com)

1500 GMT - Investors withdrew the most out of emerging-market bond funds in the week up to May 9 since volatility spiked in February, says UniCredit. EM bond funds recorded the third week of outflows in a row, for a total of over $2 billion. This had negative implications for local and hard-currency bond funds and sovereign, as well as corporate, exposure. "Recent outflows are probably indicative of a reduction in appetite for EM risk," says UniCredit. With 10-year Treasury yields rising recently to 3%, it is more appealing to hold developed-market bonds than EM ones. Things could stabilize though, with the dollar rally easing, UniCredit says. (olga.cotaga@wsj.com; @OlgaCotaga)

1455 GMT - Federal Reserve Chairman Jerome Powell says the central bank's governing board will vote on whether to remove a punitive cap on growth at Wells Fargo. The Fed planned to have staff make the decision about whether Wells had satisfied the Fed's demands, but Sen Elizabeth Warren (D, Mass.) had been pressing Powell for a vote and he agreed in a May 10 letter. He also told her the Fed will consider making public third-party reports on Wells' progress. The bank expects the cap to continue into 2019. (ryan.tracy@wsj.com; @ryanjtracy)

1401 GMT - Swiss Re has some long-term growth opportunities that aren't fully recognized, J.P. Morgan Cazenove says, as it raises the target price on the stock to CHF120 from CHF110. Among them, the U.S. broker mentions "its exposure to emerging/high growth markets via reinsurance, and its smaller more innovative products within Life Capital." The Swiss reinsurer is JPM Cazenove's top pick in reinsurance. Shares in Swiss Re trade 0.3% higher at CHF94.96. (pietro.lombardi@dowjones.com; @pietrolombard10)

1349 GMT - Global securities lending revenue had its best first quarter in a decade in the first three months of 2018, according to IHS Markit. Revenue rose 22% compared with 1Q 2017, and narrowly exceeded 1Q 2016, the previous best post-crisis quarter. "The internals of that return are important however, with government bond lending representing 18% of 1Q 2018 revenue, whereas the asset class only contributed 11% of 1Q 2016 revenue," IHS Markit says. "Corporate bond revenue has also grown as a percentage of all lending revenue, representing 7% of the 1Q total. While fixed-income lending has certainly been growing faster than equities in percentage terms, 1Q equity lending revenue rose by $530 million as compared to 1Q 2017." (philip.waller@wsj.com)

1334 GMT - UniCredit's results for the first quarter showed good operating trends, Morgan Stanley says, raising its price target on the stock to EUR21 from EUR20. Net interest income and fees were ahead of expectations, and the U.S. bank sees cost trends ahead of UniCredit's targets for 2018 and 2019. "We see good progress on cost-cutting while we think the visibility on core profitability is improving with the rundown of the noncore [portfolio] now targeted by 2021," it says, referring to UniCredit bringing the rundown forward to 2021 from 2025. Shares in UniCredit trade 0.2% higher at EUR17.90. (pietro.lombardi@dowjones.com; @pietrolombard10)

1219 GMT - UniCredit delivered strong results in the first quarter, Deutsche Bank says as it raises its target price on the stock to EUR21.9 from EUR21.5. The results showed improved asset quality, strong net interest income and solid capital, the German bank says. The 1Q results "reinforce the credibility" of UniCredit's medium-term targets and Deutsche Bank's positive stance on the stock, it says. Shares in UniCredit trade 0.1% higher at EUR17.88. (pietro.lombardi@dowjones.com; @pietrolombard10)

1159 GMT - Intesa Sanpaolo's net profit rose sharply in the first quarter of the year and beat expectations, but Berenberg believes the bank may not be able to increase its earnings enough to justify its valuation. "Risks are very much to the downside," it says. The German brokerage expects one-time gains to support growing dividend this year. "However, these gains are one-offs and now that Intesa's dividend is based on payout, earnings disappointment will ultimately lead to dividend disappointment, in our view." Shares in Intesa Sanpaolo trade 0.5% higher at EUR3.15. (pietro.lombardi@dowjones.com; @pietrolombard10)

1126 GMT - UniCredit is one of the few banks to own in the eurozone, Berenberg says. "From loan losses at decade-lows to cost-cutting running ahead of schedule, UniCredit's results have been impressive," the German brokerage says. The Italian bank said Thursday it anticipates bringing forward the rundown of the noncore portfolio to 2021 from 2025, a move Berenberg sees as positive. "First, it shows how successful UniCredit is in de-risking the balance sheet. Second, it removes a drag on earnings," it says. Shares in UniCredit trade 0.2% higher at EUR17.90. (pietro.lombardi@dowjones.com; @pietrolombard10)

(END) Dow Jones Newswires

May 12, 2018 04:20 ET (08:20 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
Top 5 Special Reports
USD/INR (Aug 20) Consolidating Within an Emerging Do...
Major Changes in State-wise Cotton Acreage; Telangana S...
India Set for 310 Lk Tons of Sugar Output Next Season
USD/INR (Aug 20) Consolidating Below Key Resistance ...
USD/INR (Aug 20) Consolidating Below Key Resistance ...