Comerica Quarterly reporting
Quarterly Reports Comerica Bank was substantially better than expected, and investors were able to please both profits and revenues. The latter grew by 16%, which is a very good result, especially given the statements of other financial institutions for the III quarter. However, it is worth noting that a significant portion of these results were achieved at the expense of one-time gains, respectively, the target bank's profit was not so impressive.
Such good results CMA for the III quarter of 2009 to a greater extent been caused by non-interest income from the revaluation of the portfolio of trading securities ($ 107 million, or $ 0.46 per share, in the last quarter of results from the revaluation of securities were even slightly higher - $ 113 million), proceeds from redemption of debt ($ 17 million, or $ 0.03 per share), as well as tax revenues ($ 9 million, or $ 0.06 per share). If you adjust the bank's profit on these figures, the results of III quarter loss the bank made $ 0.65 per share, worse than the market had expected.
The quality of the loan portfolio continued to deteriorate, but in general, this dynamics corresponds to the fact that the market had expected. The share of non-performing loans rose to 2.74% of the loan portfolio, in II quarter of 2009 it stood at 2.43%, but the growth rate of non-performing assets slowed down: 6% in III quarter versus 15% in II quarter 2009 write-offs of problem loans fell in absolute terms, but not significantly, only $ 9 million since its inception and is unlikely to be a sign of improving the quality of the loan portfolio, as wellas the reservation to cover bad loans remained almost the same level as last quarter, plus the entire net to book even increased by $ 8 million This indicates that banks are still afraid of the further growth of the debt problem and fully explained the structure of loan portfolio CMA.
Net interest margin the Bank continued its decline, reaching a target of 2.68%, a 5 bp less than in the II quarter. It is a fact we were unpleasantly surprised, but it is caused by excess bank liquidity at the moment. Now about 10% of bank assets are in low-income short-term investments. In the future, this excess liquidity will be directed to the growth of credit portfolio, which will positively affect the bank's interest income and net interest margin.
The Bank continues to demonstrate a high capital adequacy. According to this indicator, it looks better than its main competitors. The increase in capital adequacy ratio has been largely associated with the unloading of balance - assets for III quarter decreased by $ 4 billion
Among the positive points can also note the high stability of the profits to a reserve and the payment of taxes. Of course, this figure is still about 30-35% below the levels of early 2007, but the stability of this indicator can boast, not all competitors Comerica.
From our point of view, the reporting bank is neutral. Growth potential for the shares of Comerica in the next 12 months is, as we believe, at the level of up to 10%. Our recommendation to hold.
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