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ICICI Securities: U.S. Banks’ Q3 CY20 Earnings Analysis - Prudent Provisioning Takes A Pause; Uncertainty Still Looms 

ICICI Securities: U.S. Banks’ Q3 CY20 Earnings Analysis - Prudent Provisioning Takes A Pause; Uncertainty Still Looms

An employee uses a machine to count U.S. one-hundred dollar banknotes at the Hang Seng Bank Ltd. headquarters in Hong Kong, China. (Photographer: Paul Yeung/Bloomberg)
An employee uses a machine to count U.S. one-hundred dollar banknotes at the Hang Seng Bank Ltd. headquarters in Hong Kong, China. (Photographer: Paul Yeung/Bloomberg)

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ICICI Securities Report

One clear trend in U.S. banks’ Q3 CY20 earnings was pause in prudent provisioning and modest credit cost (0.3-0.6% versus 3.5-4.5% in Q2 CY20, 2.0-3.0% in Q1 CY20), leading to earnings beat.

Key trends:

U.S. bank managements remain divided over the future outlook as ambiguity still prevails and consequently over future trajectory of credit cost/delinquencies.

Credit reserves seem more than adequate for the base case scenario, but Covid-19 risks are not completely behind and current recovery is supposedly attributed to financial stimulus by the government.

Loan portfolio moderated 2% QoQ as consumers took fiscal aid to lighten their debt obligations.

Click on the attachment to read the full report:

ICICI Securities Banking Read Through From US Bank Q3CY20 Earnings.pdf

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