Vanguard Financials ETF

Since the financial crisis of 2009, there has been intense pressure on US banks to raise capital levels to meet minimum requirements.

In the first quarter, BlackRock managed ~$1.9 trillion in fixed income offerings, up from ~$1.6 trillion in the first quarter of 2017.

Charles Schwab’s (SCHW) banking operations have seen strong growth over the past few quarters on accumulation of assets, expanding balance sheet, and interest income.

At Wells Fargo’s investor day presentation, chief financial officer John Shrewsberry warned investors of more losses on energy-related loans.

Wells Fargo’s first quarter earnings surpassed expectations but fell 5% YoY (year-over-year). The net interest income increased by 6% to $11.7 billion.

Asset managers (VFH) are seeking stability in order to attract funds toward either equity or debt offerings.

BlackRock (BLK) stock has risen 27.6% over the past six months and 39.0% over the past year.

Trump’s domestic growth-friendly policies Returns have been surging for the financial sector (XLF) (VFH) as the market expects to benefit from the Trump administration’s projected policies. Markets are highly confident with the expectation of more rate hikes, for example, and of widespread deregulation. Banks’ earnings have thus been getting a huge boost, and the market has been […]

Charles Schwab (SCHW) has improved its operating margins on improved interest income, administration fees, asset management fees, and new assets.

Morgan Stanley’s 2Q16 earnings beat analysts’ estimates, as the bank reported considerably lower legal expenses.

March US crude oil (DBO) (UWT) futures contracts increased 1.8% to $65.61 per barrel on January 24, 2018.

In this series, we’ll compare Bank of America and J.P. Morgan on the basis of their 2Q earnings, profitability, cost-cutting initiatives, and interest rate sensitivities.

In terms of profitability, Citigroup’s return on equity (ROE) fell to 8.0% from 9.1% in the previous quarter but rose sharply from the 5.3% reported in 3Q14. Return on assets fell to 0.9% from 1.1% in 2Q15.

Goldman Sachs ranked first in worldwide announced and completed mergers and acquisitions so far in 2015.

Analysts expect Goldman Sachs to post 1Q16 EPS of $2.48, which is 45% lower than the corresponding period last year.

Citigroup and Bank of America have recovered well from the financial crisis. They have generated steady profits in the last few years and have strengthened their capital.

The recent fall in stocks globally is expected to put some pressure on asset managers’ (VFH) operating performances in 1Q18.

JPMorgan Chase’s 1Q16 earnings beat investors’ expectations. Loan growth and credit quality improved despite weakness from the investment banking business.

Corporates accounted for about 44% of the total investment-grade debt (LQD) issuance for the week ended June 27. Financial sector (VFH) issuers accounted for ~38%.

The rise in delinquencies on student loans in the United States (SPY) (IWM) (QQQ) can be partially attributed to the accelerated rise in college tuition and fees.

The total spending on Visa’s (V) network rose 11% to $2.1 trillion in the second quarter—slightly better than analysts’ estimates of $2.09 trillion.

Proprietary trading firms and hedge funds formed 4% of Interactive Brokers Group’s (IBKR) total accounts in the second quarter.

The primary reason for Interactive Brokers Group’s premium valuation is its strong second-quarter results.

In the second quarter, Interactive Brokers Group (IBKR) saw daily average revenue trades (or DARTs) of 797,000.

Interactive Brokers Group (IBKR) posted net revenues of $445 million in the second quarter, a rise of 14.9% on a YoY basis.

TD Ameritrade (AMTD) released its third fiscal quarter results on July 23. The company posted an EPS of $0.89, which exceeded analysts’ expectations.

After second-quarter earnings, Charles Schwab (SCHW) has “strong buy” ratings from seven analysts and a “sell” rating from one analyst.

Technological investments, competitive commission rates, and acquisitions are expected to drive the brokerage industry moving forward.

Asset management and administration fees contributed $814 million, or 32.7%, of Charles Schwab’s (SCHW) net revenues in the second quarter.

As of June 30, Charles Schwab (SCHW) had total client assets of $3.4 trillion, a YoY rise of 12% and a sequential rise of 3%.

E*TRADE Financial posted second-quarter EPS of $0.95, which beat Wall Street estimates by $0.07.

Charles Schwab’s (SCHW) second-quarter net revenues came in at $2.5 billion, a YoY rise of 17% and a sequential rise of 4%.

On July 17, Interactive Brokers Group declared its second-quarter earnings. The company’s EPS was $0.39, which missed analysts’ expectations by $0.02.

Charles Schwab (SCHW) reported its second-quarter results on July 17. The company posted an EPS of $0.60, which exceeded analysts’ estimates.

In July, Interactive Brokers had two “strong buy” ratings out of six analysts tracking the stock.

The PE ratio of Interactive Brokers Group (IBKR) is 26.17x on an NTM (next-12-month) basis.

In the second quarter, Interactive Brokers Group (IBKR) is expected to generate fees and commissions income of $195 million.

Interactive Brokers Group (IBKR) saw DARTs of 797,000 in the second quarter, which implies a sequential fall.

In the second quarter, Interactive Brokers Group (IBKR) is expected to report net interest income of $255.1 million.

Interactive Brokers Group (IBKR) is expected to report its Q2 2018 earnings on July 17. It’s expected to have lower commissions.

E*TRADE Financial Corporation (ETFC) is scheduled to release its second-quarter results on July 19. Wall Street is expecting EPS of $0.89, implying year-over-year growth of 27.1%.

In July, Charles Schwab (SCHW) got six “hold” ratings and one “sell” rating of the 20 analysts covering the stock.

Charles Schwab (SCHW) has a PE ratio of 18.99x on an NTM (next-12-month) basis.

In the first quarter, Schwab (SCHW) generated total asset management and administration fees of $851 million.

Moving forward, the markets could see higher volatility, mainly due to prevailing trade tensions that are disrupting global trade.

Charles Schwab’s net interest income is largely influenced by interest-earning assets and interest rates.

On July 17, Charles Schwab (SCHW) is expected to post its second-quarter earnings. Analysts expect it to report EPS of $0.58.

Interactive Brokers Group reported daily average revenue trades of 799,000 in June, a month-over-month rise of 2% and a year-over-year rise of 17%.

Over the long term, trade wars could negatively impact investors’ views on equities, primarily due to the risks they carry.

The primary reason for investors’ preference for safer instruments is highly unstable global factors.

Brokerages could see a negative impact from escalating trade wars between the United States and China in the long term.

Charles Schwab (SCHW) is expected to report strong numbers in the second quarter mainly due to supportive macro fundamentals.

On June 11, E*TRADE Financial released results from a study on investor sentiment about the June Fed meeting and the overall economy.

Market participants tend to prefer digital tools to execute trades because of lower costs and faster execution.

We’re almost halfway through the current year, and market dynamics seem to have supported brokerages (VFH).

On June 6, Interactive Brokers (IBKR) attended the Sandler O’Neill Global Exchange and Brokerage Conference, where it shared company insights.

In the second quarter, Interactive Broker Group is expected to witness a drop in its commission revenues sequentially due to a fall in its DARTs.

For TD Ameritrade, six analysts recommend a “hold,” one recommends a “strong sell,” five recommend a “buy,” and seven recommend a “strong buy.”

TD Ameritrade’s (AMTD) PE ratio stood at 16.68x on a next 12-month basis, which implies discounted valuations.

TD Ameritrade’s (AMTD) performance will likely depend on the economic and political factors prevailing in the economy.

TD Ameritrade (AMTD) is expected to report an EPS of $0.8 in the fiscal third quarter, which ends in June.

TD Ameritrade (AMTD) operates in a very competitive industry. The company needs to retain its clients in order to experience long-term growth.

TD Ameritrade (AMTD) benefited from clients’ higher trading activities in the second quarter, which ended on March 31.

Of the six analysts covering Interactive Brokers (IBKR), two recommend “strong buy,” two recommend “hold,” and two recommend “strong sell.”

In the first quarter, Interactive Brokers (IBKR) exceeded analysts’ EPS and revenue expectations, like peers (VFH) Charles Schwab (SCHW) and E*TRADE Financial (ETFC).

Interactive Brokers (IBKR) has an NTM (next-12-month) PE ratio of 32.7x, which is higher than peers’ average of 18.5x.

Interactive Brokers (IBKR) drew market participants’ attention in the first quarter, primarily because of expectations of higher interest rates and strong volatility.

In the first quarter, trade tensions and interest rate hike expectations made equity markets volatile, resulting in brokerages’ (VFH) customers trading more and boosting brokerages’ revenue.

Wall Street analysts are expecting a limited upside for asset managers (VFH) as well as broader indexes in 2018.

Digital assets based on DLT (distributed ledger technology) allows users to initiate and verify their own transactions without any central authority such as banks.

BlackRock is currently trading at a forward price-to-earnings ratio of 17.6x, compared with the industry average of 18.6x.

Deutsche Bank is planning to use blockchain technology in currency settlement, trade processing, and derivative contracts.

Among the major asset managers, BlackRock (BLK) is expected to post sequential and year-over-year growth in earnings per share to $6.38 in 1Q18 and $6.83 in 2Q18.

Analysts gave BlackRock a price target of $614.92 on a next-12-month basis.

BlackRock’s (BLK) board approved a 15.0% increase in quarterly dividends to $2.88 payable in March 2018.

BlackRock managed assets worth ~$1.9 trillion on December 31, 2017, compared with ~$1.6 trillion during the previous year.

BlackRock’s (BLK) Retail division attracted $11.0 billion in new flows in 4Q17, compared to outflows of $2.0 billion in 4Q16.

BlackRock’s (BLK) outperformance, estimate beats, and new assets have helped the company command premium valuations.

Asset managers (VFH) have had “buy” to “hold” ratings in recent months since equities are expected to be upbeat in the next few quarters.

Leon Cooperman is optimistic about both the financial sector (XLF) and the technology sector (XLK).

Mike Wilson of Morgan Stanley is overweight on the financial and technology sectors. He believes these sectors will benefit the most from tax reform.

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Barack Obama signed the Dodd-Frank Act into federal law in 2010.

Charles Schwab’s (SCHW) Advisory Services segment had total assets of ~$1.4 trillion as of November 30, 2016. It was an 8.0% rise on a year-over-year basis.

Charles Schwab’s (SCHW) stock has risen 23% during the past three months, mainly due to higher assets, strong operating performance, and improving broad markets.

In the first nine months of fiscal 2016, Charles Schwab (SCHW) added 55,000 new accounts to 1,088,000 total accounts.

Charles Schwab’s (SCHW) daily average trades rose to 543,000 in 3Q16 as compared to 518,000 in the previous quarter and 537,000 in 3Q15.

Charles Schwab’s (SCHW) Advisor Services segment had total client assets of $1.2 trillion on June 30, 2016, forming 46% of the company’s total client assets.

Charles Schwab (SCHW) reported a strong pre-tax margin of 39.4% in 2Q16, as compared to 36.2% in 2Q15. For 1H16, the company has reported a 38.3% margin.

In 1H16, Charles Schwab (SCHW) added 13,000 new accounts—a YoY rise of 6%. In 2Q16, the bank’s balance sheet expanded to $153.9 billion—a YoY rise of 26%.

Wells Fargo and Citigroup have recovered well from the financial crisis. They have generated steady profits in the last few years and have strengthened their capital.

JPMorgan Chase (JPM) and Wells Fargo (WFC) reported profits of $6.2 billion and $5.6 billion, respectively, in the most recent quarter.

Bank of America (BAC) and J.P. Morgan (JPM) have regularly rewarded shareholders through dividends and share buybacks.

Bank of New York Mellon (BK) has been focusing extensively on efficiency through cost controls to boost its profitability.

The consensus rating among the 19 analysts covering Rockwell Collins (COL) leans toward a “buy” call.

PNC Financial’s non-interest income for 2Q16 increased by 10% over the previous quarter, mainly due to higher fee income growth.

J.P. Morgan’s 2Q16 earnings surpassed investors’ expectations as loan growth and credit quality improved.

Wells Fargo has the largest loan portfolio in the financial sector (XLF). Its bedrock foundation is its mortgage portfolio.

Charles Schwab (SCHW) is expected to post earnings per share (or EPS) of $0.33 as compared to $0.25 in the corresponding quarter last year.

BlackRock’s (BLK) iShares had assets under management (or AUM) of $1.1 trillion as of March 31, 2016. The company continues to bring in innovative themes to address investor needs.