NIM Stock News & Sentiment

PB is well-poised for growth given strategic buyouts, improving deposit mix and decent loan demand. Yet, contracting NIM and weak mortgage income are woes.

Lloyds Banking Group plc recently released Q3 2024 earnings, beating consensus on both the top and bottom lines. Return on tangible equity was a healthy ~15%. The bank's net interest margin expanded on a sequential basis, a better performance than expected, thanks to structural hedge income. With Lloyds generating healthy levels of capital, dividends and buybacks offer investors an attractive total payout yield, while the implied price-earnings multiple remains comfortably below 10x.

Fifth Third Bancorp has gained over 75% in the past year but saw a 2% drop after mixed Q3 results. Despite stable deposits and improved net interest income, credit trends were slightly disappointing, with increased provisions for credit losses. FITB's capital position remains strong, with a CET1 ratio of 10.75% and ongoing share repurchases and dividends provide solid capital return yields.

Bank of America stock has been fairly lackluster over the past two years or so, trailing close peer JPMorgan significantly in that time. The bank's net interest margin hasn't quite seen the same degree of upside from higher interest rates, but that should change over the full course of the cycle. Upside to NIM can drive profitability closer to management's goal. At 11x forward EPS estimates, the stock looks like a reasonable value for long-term investors.

Southern bank Cadence has outperformed over the past 12 months, as its net interest margin has perked up after being hurt following the steep rise in industry-wide funding costs. CADE had a slightly weaker loan and earning-asset beta over the hiking cycle, though with room to bring funding costs down, that can help it now that rates are falling. EPS is seen growing nicely next year. With these shares trading for under 12x consensus 2024 EPS, near-term returns potential looks attractive.

Blue Owl Capital Corporation offers an attractive dividend yield of over 11% with strong dividend coverage, but caution is advised due to high PIK income and declining NIM. The portfolio quality remains robust, with over 81% of investments in Grade 2 and a reduction in higher-risk investments, signaling stable credit quality. OBDC's dividend is well-covered by net investment income, boasting a coverage ratio of nearly 130%, providing reassurance despite a slight decline in NIM.

Shares of Bank of Hawaii have done okay since my last update in March, with the broader regional bank rally powering a circa 15% total return in that time. Q2 saw the bank finally post an uptick in both net interest income and margin, marking the first quarter since late 2022 that both metrics have increased. While this should put the bank back on a positive trajectory with respect to earnings growth, these shares still look expensive at over 2x tangible book value.