8February20191/40BANKINGSECTORREPORT–JANUARY2019EXECUTIVESUMMARYUSbankssignificantlyoutperformedthebroadmarketonMoMbasisinJanuaryafterveryweakperformanceinDecemberwhenbankstumbledby15.5%.Thus,banksshowedthestrongestmonthlyperformancesincetheelectionrallyof2016.ButBKXindexunderperformedSPXindexinfivemonthsoverthelast9anditunderperformedthebroadmarketby14.3%in2018.InDecember,USbanksskyrocketedby12.4%MoMvs+7.9%ofSPXindex.AbsoluteDecemberperformanceonMoMbasiswas+1.8StDfromthemeananditisinthetop4%oftheabsoluteMoMperformanceofBKXindex.RelativeDecemberperformancewas+4.2%MoM,itis+0.9StDfromthemeananditisinthetop15%ofrelativeMoMperformancevsSPX.DynamicswithinthesectorwasuniformwithpositiveperformanceofallmembersofBKXindex.ThekeyoutperformerwasSynchronyFinancialwhichaddedmorethan¼ofmarketcapinJanuaryduetogoodquarterlyresults.Inturn,PNCFinancialincreasedonlyby4.9%MoMdespitereliefrallyasits4Q18resultsmissedexpectations.USbanksreportedrelativelyweakheadlinenumbersprimarilybecauseofDecemberturmoilonfinancialmarketsbutunderlyingtrendsremainintact.Somarketreactionontheearningsseasonwaspositiveaftersell-offinDecember.15outof24ofourgroupofbanksdemonstratedpositiveEPSsurprises,thelowestfigureoverthelast11quarterswhilemedianshareofpositiveEPSsurpriseswasthelowestoneoverthelast13quarters.Thus,medianEPSsurpriseforourgroupofbankswas+1%vsmedianquarterlyfigureoverthelast12yearsof4.3%.Moreover,revenuesurprisewasnegative,thesecondquarteroverthelastyear,-0.05%.Just11companiesofourgroupofbanks,or46%,demonstratedpositivesurprisevsthemedianquarterlyfiguresinceQ12007of62.5%.Butmarketperceptionoftheresultswasclearlypositive–BKXindexincreasedby6.5%sincethestartoftheearningsseasontilltheendofJanuarywhileS&P500indexadded4.2%overthesametime.Medianpercentchangeinpricearoundtheearningsdateofourgroupofbanksof+1.3%wasthehighestoverthelast9quarters.ButconsensusestimateswerereviseddownQTD.Thus,1Q19EPSestimatewasreviseddownby0.3%QTD,2019FYEPSestimatewasloweredby0.4%while2020FYEPSestimateddeclinedby0.7%....
