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What's in Store for SVB Financial (SIVB) in Q2 Earnings?

SVB Financial Group SIVB is scheduled to report second-quarter 2022 results on Jul 21, after market close. The company largely caters to start-up, venture capital and private equity communities. The demand for loans from such niche sectors remained decent in the to-be-reported quarter.

Hence, SIVB is expected to have witnessed growth in total loan balances. The Zacks Consensus Estimate for average total interest-earning assets is pegged at $215.5 billion, suggesting a rise of 3.9% from the prior quarter’s reported number.

Supported by higher loan demand and the hike in interest rates during the quarter (the Federal Reserve increased the rates by 50 basis points and 75 basis points in May and June, respectively), SVB Financial’s net interest income (NII) is likely to have improved. The consensus estimate for NII (on a tax-equivalent basis) is pegged at $1.21 billion, implying growth of 11% sequentially.

Other Major Factors and Estimates for Q2

Non-Interest Income: While rising inflation hurt consumer sentiments during the second quarter, decent economic growth and pent-up demand are expected to have driven consumers toward using cards. Thus, this likely had a positive impact on SIVB’s card business. The Zacks Consensus Estimate for credit card fees of $40.08 million suggests 8.3% growth sequentially.

The consensus estimate for deposit service charges is pegged at $31.17 million, indicating a 3.9% rise on a sequential basis. The Zacks Consensus Estimate for client investment fees of $86 million suggests a substantial jump from the previous quarter’s reported figure.

Further, a decent rise in loan demand is expected to have offered support to SVB Financial’s lending-related fees. The Zacks Consensus Estimate for the same of $20.08 million indicates a 5.7% rise from the prior quarter.

The Zacks Consensus Estimate for foreign exchange fees is pegged at $75 million, suggesting a rise of 2.7% from the prior-quarter reported level.

Thus, the consensus estimate for core fee income (including client investment fees, foreign exchange fees, credit card fees, deposit service charges, lending-related fees and letters of credit fees) of $314 million indicates a surge of 36.5% sequentially.

Amid weakness in capital markets and an industry-wide slowdown in deal-making, SIVB is expected to have recorded a fall in investment banking fees. The Zacks Consensus Estimate for the same is pegged at $92 million, suggesting a fall of 1.1% sequentially. Also, the consensus estimate for commissions of $23 million indicates an 8% decline.

The consensus estimate for total non-interest income of $452 million implies a 12.6% decrease sequentially.

Expenses: SVB Financial has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and hiring. As the company has been expanding inorganically, expenses related to these will be incurred. Thus, overall costs are likely to have increased in the to-be-reported quarter.

Credit Quality: With the rise in loan demand and expectations of economic slowdown due to geopolitical and macroeconomic concerns, SIVB might have further increased provisions in the second quarter.

The Zacks Consensus Estimate for total non-performing assets of $76 million suggests a rise of 4.1% sequentially. The consensus estimate for total non-performing loans of $77 million implies a rise of 6.9%.

What the Zacks Model Unveils

Per our proven model, the chances of SVB Financial beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for SVB Financial is -1.56%.

Zacks Rank: The company currently carries a Zacks Rank #3.

SVB Financial Group Price and EPS Surprise

SVB Financial Group price-eps-surprise | SVB Financial Group Quote

The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at $7.43 per share, which has moved 1.1% lower over the past seven days. The figure indicates a year-over-year decline of 18.3%.

The consensus estimate for sales of $1.64 billion suggests growth of 9.7% from the prior-year quarter’s reported number.

Banks to Consider

M&T Bank MTB and F.N.B. Corporation FNB are a few stocks from the banking space that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.

MTB is scheduled to release second-quarter results on Jul 20. MTB currently has a Zacks Rank #2 (Buy) and an Earnings ESP of +1.53%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for F.N.B. Corp is +0.55% and the company carries a Zacks Rank #2 at present. FNB is slated to report results on Jul 20.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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M&T Bank Corporation (MTB): Free Stock Analysis Report
F.N.B. Corporation (FNB): Free Stock Analysis Report
SVB Financial Group (SIVB): Free Stock Analysis Report
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