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Globe and Mail
2 days ago
- Business
- Globe and Mail
Zacks Industry Outlook Highlights U.S. Bancorp, The Bank of New York Mellon, Truist Financial and Northern Trust
For Immediate Release Chicago, IL – June 20, 2025 – Today, Zacks Equity Research discusses U.S. Bancorp USB, The Bank of New York Mellon Corp. BK, Truist Financial Corp. TFC and Northern Trust Corp. NTRS. Industry: Major Regional Banks The Zacks Major Regional Banks are expected to continue witnessing weak asset quality as Trump's tariffs will likely result in higher inflation in the near term. This, along with modest economic expansion, is likely to lead to a marginal rise in loan demand. Yet, once the uncertainty related to tariffs is over, industry players' net interest income (NII) and margins will benefit. Business restructuring/expansion initiatives and digitization will offer support. Hence, major banks like U.S. Bancorp, The Bank of New York Mellon Corp., Truist Financial Corp. and Northern Trust Corp. are likely to gain. About the Industry The Zacks Major Regional Banks industry includes the nation's largest banks in terms of assets, with most operating globally. The financial performance of these banks largely depends on the nation's economic health. As the banks are involved in several complex financial activities, they are required to meet the stringent regulations set by the Federal Reserve and other agencies. Apart from traditional banking services, which are the source of the net interest income (NII), major regional banks provide a wide array of other financial services and products to retail, corporate and institutional clients, domestic and global. These include credit and debit cards, mortgage banking, wealth management and investment banking, among others. Therefore, a large revenue source for these banks is fees and commissions earned from these services. 4 Themes Shaping the Future of the Major Regional Banks Industry Tariffs & Their Impact on Interest Rates: Last year, the Fed lowered the interest rates by 100 basis points but has kept them steady since then. While the initial impact of President Trump's tariffs seems to be minimal on inflation, the uncertainty regarding their effect on prices is leading the central bank to take a cautious stance on the interest rate path. At present, market participants are expecting one or two rate cuts late in the year. As the rates come down, major regional banks will likely benefit from further fall/stabilization of deposit costs and a gradual improvement in the lending scenario. There will likely be near-term pain in the form of lower NII and NIM, but the industry players are expected to benefit from reduced interest rates once the ambiguity related to tariffs gets resolved. Modest Rise in Loan Demand: The central bank's aggressive monetary policy hurt loan demand amid the risk of a severe economic downturn/recession. While the Fed's Summary of Economic Projections (SEP) released in March 2025 indicated that the U.S. economic growth is expected to slow down a bit this year because of concerns over tariffs, demand for loans is likely to be modest at relatively lower interest rates. As such, major regional banks' NII and NIM are expected to rise slightly. Restructuring Initiatives: Major regional banks are undertaking initiatives to expand into new avenues and lower their dependence on spread income. The business restructuring is essential for technological advancement and further domestic/global expansion to continue improving profitability. The industry players are constantly investing in artificial intelligence and other digital platforms and even partnering/acquiring providers of such services. Major regional banks are also aggressively expanding their footprint outside the United States. Several industry players are re-evaluating their business structure to simplify operations and do away with less profitable ones. Weak Asset Quality: Mounting concerns about the economic health and uncertainty about the impacts of policies being pursued by the Trump administration are likely to push prices up. This will take a toll on clients' ability to repay loans. Thus, industry players are building additional reserves to counter any fallout from unexpected defaults and payment delays. While conservative lending policy and the resilience of borrowers helped major regional banks keep their asset quality manageable, several metrics have crossed the pre-pandemic era levels. This signals the gradual deterioration of the industry players' asset quality. Zacks Industry Rank Reflects Optimistic Outlook The Zacks Major Regional Banks industry is a 10-stock group within the broader Zacks Finance sector. The industry currently carries a Zacks Industry Rank #98, which places it in the top 40% of more than 250 Zacks industries. The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. The industry's positioning in the top 50% of the Zacks-ranked industries is a result of an encouraging earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gaining confidence in this group's earnings growth potential. In the past year, the industry's earnings estimates for 2025 have been revised 1.3% upward. Before we present some major bank stocks to keep on your radar, let's take a look at the industry's recent stock market performance and valuation picture. Industry Outperforms the S&P 500, Trails the Sector The Zacks Major Regional Banks industry outperformed the S&P 500 composite while lagging the sector in the past year. Stocks in this industry have collectively soared 17.4% in the past year. In the same time frame, the Zacks S&P 500 composite has jumped 9.1% and the Zacks Finance sector rallied 17.8%. Industry's Valuation One might get a good sense of the industry's relative valuation by looking at its price-to-tangible book ratio (P/TBV), which is commonly used for valuing banks because of large variations in their earnings results from one quarter to the next. The industry currently has a trailing 12-month P/TBV of 2.18X. This compares with the highest level of 3.23X, the lowest of 1.49X and the median of 2.32X over the past five years. The industry is trading at a huge discount compared with the market at large, as the trailing 12-month P/TBV for the S&P 500 composite is 12.74X. As finance stocks typically have a lower P/TBV ratio, comparing major regional banks with the S&P 500 may not make sense to many investors. However, comparing the group's P/TBV ratio with that of the broader sector ensures that the group is trading at a solid discount. The Zacks Finance sector's trailing 12-month P/TBV came in at 5.25X. This is above the Zacks Major Regional Banks industry's ratio. 4 Major Regional Banks to Keep on Radar U.S. Bancorp: Headquartered in Minneapolis, MN, U.S. Bancorp provides banking and investment services, principally operating in the Midwest and West regions of the United States. A solid business model and diverse revenue streams are likely to aid its financials. USB has experienced solid growth in average loans and deposits in the past few years as it continued to expand and deepen relationships with current customers and acquire new customers and market share. The solid pipeline in the commercial and credit card space is expected to drive loan growth. Also, stabilizing deposit trends will continue to support deposit growth. Organic growth and diverse revenue sources are key strengths of U.S. Bancorp. Management is encouraged by current trends in client growth and penetration rates, as evidenced by the continued strength of its fee revenue businesses. Hence, the company's revenue trend, which is backed by growth in fee income and NII, is set to improve. U.S. Bancorp has completed several strategic acquisitions over the years, which have opened new markets to it and fortified existing markets. In 2022, it acquired MUFG Union Bank's core regional banking franchise, expanding its branch network and enjoying greater access to digital banking tools. Such buyouts and the ongoing investments in innovative product enhancements, services and people will strengthen this Zacks Rank #3 (Hold) company's fee-based businesses. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. USB has a market cap of $67 billion. The Zacks Consensus Estimate for earnings suggests 8.3% growth for 2025 and 8.8% for 2026. In the past year, the stock has gained 8.6%. BNY Mellon: Operating in 35 countries, BNY Mellon provides various products and services to individuals and institutions. Its global client base consists of financial institutions, corporations, government agencies, endowments and foundations, and high-net-worth individuals. Higher interest rates continue to support BNY Mellon's top-line growth. While the company's NII and NIM declined in 2020 and 2021, both rebounded solidly thereafter. Though higher funding costs will likely weigh on NII, the metric is anticipated to keep improving in the quarters ahead, driven by lower rates. BNY Mellon's growth initiatives are impressive. The company has been launching several new services and products, digitizing operations and making strategic acquisitions. In 2024, BK acquired Berwyn, PA-based Archer Holdco, LLC, a leading technology-enabled service provider of managed account solutions to the asset and wealth management industry. This will bolster the company's retail wealth presence. The company also announced plans to launch Alts Bridge, an extensive data, software and services solution. This Zacks Rank #3 company has been trying to gain a foothold in foreign markets and is undertaking several growth initiatives (including launching new services, digitizing operations and making strategic buyouts). Its international revenues are expected to continue improving as the demand for personalized services rises globally. BNY Mellon has a market cap of $63.4 billion. The Zacks Consensus Estimate for earnings indicates growth of 12.8% for 2025 and 13.1% for 2026. In the past year, the stock has jumped 53%. Truist Financial: Formed following the 'merger of equals' deal between BB&T Corp and SunTrust Banks, Truist Financial has become one of the largest commercial banks in the United States. The company, based in Charlotte, NC, conducts business operations primarily through its bank subsidiary, Truist Bank, and a few other non-bank subsidiaries. Growth in loans, relatively higher interest rates and Truist Financial's efforts to improve fee income are likely to keep aiding financials. An improvement in NII has been recorded due to decent loan demand and rising rates. Management remains open to strategic business restructuring initiatives to bolster fee income. In sync with this, in 2024, the company sold its stake in its insurance subsidiary, Truist Insurance Holdings. Subsequently, the bank undertook a balance sheet repositioning to support NII in the quarters ahead. These measures bolstered the bank's capitalization and liquidity profile. Further, last year, the company divested its asset-management subsidiary, Sterling Capital Management LLC. Earlier, this Zacks Rank #3 company had acquired Service Finance Company, which augmented its point-of-sale lending business. Driven by these restructuring efforts, Truist Financial is expected to witness growth in the top line. TFC has a market cap of $51 billion. The Zacks Consensus Estimate for earnings implies growth of 5.7% and 12.9% for 2025 and 2026, respectively. The stock has risen 6.7% in the past year. Northern Trust: Headquartered in Chicago, Northern Trust provides services to various clients, from sovereign wealth funds to the wealthiest families. The company is a leading provider of wealth management, asset servicing, asset management and banking solutions to corporations, institutions, families and individuals. Organic growth is the company's key strength. Its revenues witnessed a CAGR of 7.8% over the last four years (2020-2024), driven by rising non-interest income and NII. As the client base expands, the company expects to see a rebound in loan activity. This ongoing focus on wealth management is expected to drive growth in the lending portfolio in the near term. Also, robust pipelines in the Asset Servicing segment will likely drive top-line growth. NTRS is undertaking expense management efforts to tackle expense growth and reinstate its operating leverage. It focused on disciplined headcount management, vendor consolidation, rationalization of its real estate footprint and process automation. Through such efforts, it will likely improve productivity and meet the financial targets. The company's capital distributions seem impressive. In 2022, Northern Trust hiked its quarterly dividend by 7% to 75 cents per share. In 2021, the company announced a 25-million share repurchase program with no expiration date. Its debt/equity ratio, which compares favorably with the broader industry, and decent liquidity highlight the fact that such capital-distribution activities are sustainable in the future. NTRS has a market cap of $21 billion. The Zacks Consensus Estimate for earnings indicates growth of 5.2% and 8.3% for 2025 and 2026, respectively. The stock, which carries a Zacks Rank of 3, has soared 32.3% in the past year. Why Haven't You Looked at Zacks' Top Stocks? Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year. Today you can access their live picks without cost or obligation. See Stocks Free >> Join us on Facebook: Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates. Media Contact Zacks Investment Research 800-767-3771 ext. 9339 support@ Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. U.S. Bancorp (USB): Free Stock Analysis Report Northern Trust Corporation (NTRS): Free Stock Analysis Report Truist Financial Corporation (TFC): Free Stock Analysis Report
Zawya
28-05-2025
- Business
- Zawya
9MFY25 Results: Hong Leong Bank Delivers Solid Business Performance
The Bank is confident that the Malaysian economy will remain resilient amidst the ongoing external headwinds KUALA LUMPUR, MALAYSIA - Media OutReach Newswire - 28 May 2025 - Hong Leong Bank Berhad ("Bank" or "HLB"), (BM: HLBANK) today announced its results for the nine months ended 31 March 2025 ("9MFY25"). New milestones achieved with total asset and gross loans/financing crossing the RM300 billion and RM200 billion mark for the first time respectively. Operating profit before allowances for 9MFY25 grew 13.2% y-o-y to RM2,924 million. Non-interest income for 9MFY25 improved by 34.1% year-on-year ("y-o-y") to RM1,115 million. Upholding solid asset quality metrics as reflected by low Gross Impaired Loan ("GIL") ratio of 0.57%. Kevin Lam, Group Managing Director and Chief Executive Officer of HLB commented, "We are confident that the Malaysian economy will remain resilient amidst the ongoing external headwinds, whilst at HLB, we focus on the execution of the 3-5 Year Transformative Plan to deliver sustainable results to our stakeholders. With that, we are pleased to announce that our business performance thus far has been commendable underpinned by solid loans/financing growth, strong non-interest income contribution and healthy asset quality. For 9MFY25, we have recorded a healthy profit before associates' contribution of RM3,311 million underpinned by topline expansion, disciplined cost management and release of management overlay allowance ("MOA"). Excluding the release of MOA, our financial performance is still robust with normalised profit before associates' contribution increasing 9.2% y-o-y, demonstrating the positive outcomes of the building blocks that were put in place. The strong growth momentum of gross loans and financing continues with 7.2% y-o-y expansion to RM201.2 billion, achieving a new milestone of crossing RM200 billion. This was contributed by expansion in our mortgage, auto loans, SME and commercial banking segments as well as key overseas markets. In view of the persistent global uncertainties, it is our utmost priority to maintain the solid asset quality with a healthy GIL ratio of 0.57%. In addition, we remain resilient and are well-positioned to continue support our customers in their personal and business endeavours." Commendable Underlying Performance Total income for 9MFY25 continued to see promising growth of 11.3% y-o-y to RM4,778 million, driven by expansion in loans/financing portfolio and improved non-interest income contribution. Net interest income for 9MFY25 was recorded at RM3,663 million, increasing 5.8% y-o-y, underpinned by strong loans/financing growth and effective funding cost management. Accordingly, n et interest margin ("NIM") was up 5bps y-o-y to 1.90%. Non-interest income for 9MFY25 maintained the notable improvement of 34.1% y-o-y to RM1,115 million. This was attributed to the encouraging performance in the wealth management business and GM franchise sales alongside the higher treasury and foreign exchange gain. Operating expenses for 9MFY25 remained well managed at RM1,854 million with positive JAWS being attained contributed by strategic cost management initiatives. Accordingly, CIR was sustained at 38.8%. Profit contribution from associates for 9MFY25 stood at RM1,099 million. During the financial period, there was also a one-off non-cash loss of RM408 million, largely attributed to the natural dilution of HLB's stake in its associated company, Bank of Chengdu Co., Ltd ("BOCD") following the completion of its convertible bonds conversion into new ordinary shares, which resulted in an increase in BOCD's total issued share capital. Correspondingly, profit before tax and profit after tax stood at RM4,002 million and RM3,185 million respectively. Excluding the release of MOA and dilution loss, profit after tax would have improved 4.0% y-o-y to RM3,289 million. Robust Growth in Loans/Financing Gross loans, advances and financing grew 7.2% y-o-y to RM201.2 billion, driven by expansion in our key segments of mortgage, auto loans, SME and commercial banking as well as key overseas markets. Domestic loans/financing increased 7.1% y-o-y, ahead of the industry growth rate of 5.3%. Residential mortgages expanded 5.8% y-o-y to RM99.1 billion, led by a healthy loans/financing pipeline. Transport vehicle loans/financing growth remained robust at 10.9% y-o-y to RM23.5 billion, underpinned by the Bank's strategic initiatives to strengthen dealer coverage. Loans to domestic business enterprises increased 6.5% y-o-y to RM65.6 billion. Fuelled by our dedicated efforts in customer acquisition and cross-selling, loans/financing to SMEs were higher by 6.8% y-o-y to RM38.2 billion, while our community banking initiative within the SME segment increased 10.1% y-o-y. In this uncertain environment, we remain proactive in engaging our clients and provide the necessary personalised support. Loans from overseas operations grew 8.1% y-o-y, on the back of solid growth of 12.6% and 11.1% in Singapore and Vietnam respectively. Solid Funding and Liquidity Positions The Bank remains prudent in its funding and liquidity positions to strengthen resilience and stability, with loans to deposits ratio ("LDR") of 87.9% as at 31 March 2025. Both the daily average for the quarter and rolling 12 months average liquidity coverage ratio ("LCR") stood at 133%, sufficiently above regulatory requirements. Customer deposits for 9MFY25 rose 5.9% y-o-y to RM225.0 billion with CASA expanding 5.0% y-o-y to RM68.3 billion. The Bank's CASA ratio stood at 30.4% supported by the Banks' strategic focus in community deposit acquisition and customer centric cash management solutions. The Bank's individual deposit portfolio expanded 7.5% y-o-y to RM118.2 billion as of 31 March 2025 with a consistently solid individual deposit mix of 52.5%, reflecting the Bank's effort to maintain a stable funding base. Healthy Asset Quality and Capital Positions The Bank continues to place significant emphasis on maintaining solid asset quality position with a low GIL ratio of 0.57%. LIC ratio stood at 95.0% as at 31 March 2025, as we maintain sufficient coverage through securities and regulatory reserves. Inclusive of the value of securities held on our GIL, the Bank's LIC ratio is well positioned at 165.0%, whilst with regulatory reserve, the coverage ratio is higher at 250.0%. Capital position of the Bank remained healthy with CET 1, Tier 1 and Total Capital ratios at 12.8%, 13.7% and 15.7% respectively as at 31 March 2025. HLB's Landmark Strategic Alliance with Lombard Odier In a move that underscores a shared vision for responsible and forward-thinking wealth management for generations ahead, HLB is entering into a Strategic Alliance with Lombard Odier, a leading global wealth and asset manager with over 220 years of heritage. Under this strong alliance, HLB Regional Wealth Management will offer clients a sophisticated and personalised experience, combining Lombard Odier's global perspectives from its Chief Investment Officer with the Bank's local market insights. This will include enhancing the bespoke wealth management solutions offered by HLB Private Bank, providing a comprehensive understanding of investment opportunities and tailored strategies for generational growth. Beyond investment expertise, HLB clients are able to access comprehensive wealth architecture and bespoke advisory services focused on their individual goals, ensuring tailored solutions for wealth preservation and transfer, including succession planning and sustainable investments. Redefining Branch Banking with New Community Branch Concept In line with its vision of being a "Digital Bank Plus Much More" and creating a powerful synergy of digital convenience and genuine human connection, HLB has launched its innovative Meet @ HLB branch concept in Eco Majestic, Semenyih. This initiative is a vital part of the Bank's broader branch transformation strategy, where it looks to strategically evolve its physical network to better serve its diverse customer base. Meet @ HLB provides customers with convenient access to ATMs, retail banking, and cash deposit machines in areas which are further away from HLB's branches. The branch is open from 12:30 pm to 7:00 pm, including weekends, which allows customers to conveniently integrate their banking needs around their busy schedules. Delivering Memorable Experiences and Supporting Creative Industries HLB is delighted to be the presenting sponsor for G-Dragon's highly-anticipated Übermensch world tour in Kuala Lumpur, exclusively organised by Tencent Music Entertainment ("TME"), which will take place on 19 & 20 July 2025 at Axiata Arena. This is aligned with the Bank's commitment to offer its valued cardholders with unparalleled experiences and rewards, providing HLB cardholders with early access privileged and VIP opportunities. On a separate note, HLB has also announced a three-year strategic partnership with the Malaysian International Film Festival (MIFFest), underscoring its commitment to supporting and developing the creative industries, while fostering unity and understanding through a diverse range of films and narratives. With MIFFest being a pivotal platform for showcasing cinematic excellence and fostering cultural exchange, HLB aspires to not only connect with a diverse tapestry of audiences, but also serve as a catalyst for the continued growth of creative industries. Best in Malaysia for Sustainable Energy Financing As HLB strengthens its focus on sustainability and supporting Malaysia's transition towards a robust circular economy, the Bank has received the award for Best Domestic and Islamic Bank for Sustainable Energy Financing 2024 at the National Energy Awards, a third win for HLB at these awards. This comes as HLB recently launched its Sustainable Finance Framework (SFF), which aims to mobilise RM20 billion in support of projects in renewable energy, energy efficiency, green building, affordable housing, clean transportation, and waste management over the next five years. HLB has made significant progress in its sustainable financing portfolio. As of December 2024, the Bank has recorded RM15.4 billion in outstanding green building and affordable property financing, RM3.6 billion in approved renewable energy financing, and RM1.4 billion in outstanding green car loans. The Bank has also achieved a 23% decrease in operational carbon emissions since 2019, as it works towards achieving total net zero greenhouse gas emissions by 2050. Driving Excellence in Islamic Banking Hong Leong Islamic Bank ("HLISB") has been named Best Islamic Retail Bank in Malaysia at the Islamic Finance News ("IFN") Best Banks Poll 2024, solidifying its position as Malaysia's premier retail bank for Islamic and Shariah-compliant banking. In FY2024, HLISB recorded a 13% y-o-y increase in profit (before zakat and taxes), boosted by a 17% rise in individual deposits. HLISB also recorded an 11% y-o-y growth in its retail financing portfolio, leading to a 10% increase in retail deposits. HLISB's recent growth in retail banking can be attributed largely to its seamless and comprehensive digital banking experience, which includes its fully-digital account onboarding experience and an end-to-end digital banking ecosystem. The Bank has also launched its HLB Wallet-i e-wallet, which allows customers to save, spend, and manage their finances across different currencies and geographies, including allowing customers to withdraw money across different currencies using the same debit card. Business Outlook Kevin Lam commented, "We maintain a cautiously balanced outlook for the Malaysian economy this year, driven by sustained private consumption amid a still healthy labour market, and anticipation for further realisation of investment projects. Nonetheless, we acknowledge the presence of global uncertainties, particularly those stemming from evolving tariffs policies and negotiations, as well as policy responses from major central banks that could potentially influence the final growth outcome, even as resilient domestic demand is expected to provide a buffer against external headwinds. In our journey to be the best-run bank in Malaysia, we have found our rhythm and remain focused on executing the strategic initiatives of our 3-5 Year Transformative Plan. This journey of continuous improvement is fundamentally about our unwavering commitment to support our customers for the long term. By leveraging our strengths in technology and AI, we will create innovative banking solutions that resonate with our customer across all touchpoints, solidifying our brand promise of "Built Around You". To drive growth in our core business and build a strong ASEAN franchise, we will continue to enhance our digital capabilities, leverage strategic alliance with best-in-class global partners, as well as empower our people to reach their greatest potential and excel in this dynamic business environment. Driven by our carbon-neutral ambition, the Bank will proactively integrate environmental, social, and governance ("ESG") strategies and practices into our own business operations, while actively collaborating with stakeholders to achieve significant, positive impact." Hashtag: #HongLeongBank #HLB The issuer is solely responsible for the content of this announcement. Hong Leong Bank Berhad
Globe and Mail
20-05-2025
- Business
- Globe and Mail
X Financial XYF Q1 2025 Earnings Call Transcript
DATE Tuesday, May 20, 2025, at 7:30 a.m. EDT CALL PARTICIPANTS Chief Executive Officer — Kent Li Chief Financial Officer — Frank Fuya Zheng President — Noah Kauffman Investor Relations — Victoria Yu Need a quote from one of our analysts? Email pr@ TAKEAWAYS Loan Originations: Facilitated RMB 35.15 billion in new loans, up 8.8% sequentially and 63.4% year over year. Total Revenue: Reached RMB 1.94 billion, a 13.4% increase from Q4 2024 and over 60% year over year. Asset Quality: 31 to 60-day delinquency rate improved to 1.25% (from 1.61%); 91 to 180-day delinquency rate declined to 2.7% (from 4.7%). Total Loan Outstanding Balance: RMB 58.4 billion, excluding loans over 60 days delinquent, up over 33% year over year. Loans Facilitated: Over 3.14 million processed, with an average loan amount of RMB 11,181. Income from Operations: RMB 573 million, up 52% year over year, reflecting improved operational leverage and expense management. Non-GAAP Adjusted Net Income: Reached RMB 467 million, a 44.9% increase year over year. Basic Earnings per ADS: USD 1.50, up approximately 45.6% year over year. Return on Equity: Increased to 25.5%, up 1.4 percentage points year over year and 3.2 percentage points sequentially. Share Repurchase Program: New buyback plan authorized for up to $100 million of Class A shares and ADS, effective January 1, 2025 to November 30, 2026, in addition to $15.9 million remaining from a previous plan. Q2 2025 Outlook: Management expects facilitated and originated loan amounts to range from RMB 37.5 billion to RMB 39.5 billion. Regulatory Environment: Management described the recent National Financial Regulatory Administration notice as reinforcing "responsible credit assets and financial stability" and committed to regulatory compliance. SUMMARY X Financial (NYSE:XYF) delivered double-digit sequential and year-over-year growth in loan originations and revenue, which management attributed to rising borrower demand and disciplined risk management. The company reported substantial improvements in adjusted net income, operational leverage, and return on equity. Despite seasonally negative effects, delinquency rates declined across key periods, with management citing enhancements to technology, underwriting, and customer engagement. Management indicated confidence in the near-term growth outlook and described increased regulatory oversight as a constructive industry development. Chief Financial Officer Zheng said, "We have recently authorized a new share repurchase plan allowing us to buy back up to $100 million worth of our Class A shares and ADS." Chief Executive Officer Li stated, "our delinquency rate will still have some uptick, but those upticks will be more than offset by our overall scale. That basically means that our profit will continue to grow despite minor increases in delinquency rates." Management reiterated that preparation for a new regulation is underway and indicated the company remains "fully compliant with the new regulation before the October 1st deadline." The company signaled it "will keep the same pace in the acquisition effort in the second quarter" and aims to achieve 30% volume growth this year, pending any regulatory impacts in the fourth quarter. INDUSTRY GLOSSARY ADS: American depositary share, a U.S.-traded equity share representing a specified number of shares in a foreign company. Delinquency Rate (31-60/91-180 Day): The percentage of outstanding loans that are 31 to 60 days, or 91 to 180 days, past due but not yet written off, used as an indicator of portfolio credit quality. Loan Origination: The process by which a lender approves and funds new loans for borrowers, relevant here as a measure of business activity volume for X Financial's marketplace. Full Conference Call Transcript Kent Li: Thank you, Victoria, and hello, everyone. We are pleased with our 2025 headwinds. In the first quarter, we facilitated RMB 35.15 billion in loans, an 8.8% sequential increase and 63.4% growth year over year. It was one of our strongest quarters for origination, reflecting solid borrower demand and continued progress in risk management. Our team remained focused on expanding opportunities through both new partnerships and existing relationships, enhancing our technology platform and underwriting models to support profitability and scalability. Balancing growth and risk as we broaden access to qualified borrowers, we are also working to improve the borrower experience by delivering faster decisions, simplifying application processes, and enhancing transparency. In parallel, we continue to strengthen platform reliability and support tools to help customers make informed borrowing decisions and manage repayment with confidence. Despite the typical seasonal impact from Chinese New Year, we achieved sequential growth in both loan volume and revenue. Total revenue reached RMB 1.94 billion, up 13.4% from Q4 and over 60% year over year. These results reflected steady progress in growing the platform responsibly. Operational and credit quality update. We also made continued progress on asset quality. As of March 31st, our 31 to 60-day delinquency rate was 1.25%, compared to 1.61% a year ago, reflecting a 22% improvement year over year. The 91 to 180-day delinquency rate was 2.7%, down from 4.7% in Q1 2024, a 37% reduction year over year. These improvements reflect disciplined borrower screening and underwriting practices. We have also continued to enhance borrower engagement and repayment behavior through timely communication and tailored repayment assistance programs. These initiatives have contributed meaningfully to our risk management outcomes and supported further portfolio stability. Now I will turn the call to Noah to go over some key Q1 metrics and highlights. Noah Kauffman: Thank you, Kent. Hello, everyone. It's a pleasure to speak with you today. Let me share several highlights from our Q1 operational and financial performance. On the operational metrics, we facilitated approximately RMB 35.15 billion in loan originations, marking a 63.4% year-over-year increase. Our total loan outstanding balance, excluding loans over 60 days delinquent, reached RMB 58.4 billion, growing by more than 33% from Q1 2024. We facilitated over 3.14 million loans with an average loan amount of RMB 11,181. On the financial highlights, total revenue grew to RMB 1.94 billion, up 13.4% sequentially and 60.4% year over year, primarily driven by higher borrow volumes and originations. Our income from operations expanded substantially, reaching RMB 573 million, up 52% year over year. This demonstrates our improved operational leverage and disciplined expense management. Our average funding costs improved year over year, supported by a more optimized funding structure and sustained commitment from our core institutional partners. This reflects the strength of our platform and deepening trust within our funding network. With these metrics, we continue to see notable gains in operational efficiency and market positioning. I'll now hand the call over to Frank to walk through the financials, discuss capital allocation priorities, provide regulatory insights, and outline our growth outlook for 2025. Frank Fuya Zheng: Thank you, Noah. It's great to speak with everyone today. I will provide additional insights into our profitability metrics, liquidity, and strategic plans for capital allocation. Non-GAAP adjusted net income for Q1 reached RMB 467 million, an increase of 44.9% year over year, reflecting sustained earnings. Basic earnings per ADS improved significantly to USD 1.50, approximately a 45.6% year-over-year increase, underscoring enhanced profitability per share. Return on equity increased to 25.5%, widening 1.4 percentage points year over year and 3.2 percentage points sequentially, reflecting our sustained financial discipline and growing operational efficiency. Our liquidity remains strong, positioning us well to support ongoing operations, investments, and capital returns. Share repurchase plan. We have recently authorized a new share repurchase plan allowing us to buy back up to $100 million worth of our Class A shares and ADS. This authorization will be in effect for an 18-month period running from January 1, 2025, to November 30, 2026. This new authorization comes in addition to our existing repurchase plan approved last December, which still has approximately $15.9 million remaining. Regulatory environment update. The regulatory environment in China remains dynamic, and we remain fully committed to compliance and alignment with the overall policy direction. The recent notice from the National Financial Regulatory Administration affirms the current trajectory with a clear focus on responsible credit assets and financial stability. We see increased oversight as a positive step that supports long-term industry development and reflects growing recognition of our role. While evolving rules introduce high compliance requirements, they also create space for innovation and more sustainable growth. We continue to engage proactively with regulatory bodies and remain focused on responsible execution within the evolving framework. 2025 growth outlook. Based on current trends, X Financial expects the total loan amount facilitated and originated in the second quarter of 2025 to be in the range of RMB 37.5 billion to RMB 39.5 billion, reflecting continued strong demand in the first quarter. With that, I will pass the call back to our President, Kent Li, for closing remarks. Kent Li: Thank you, Frank. As we progress through 2025, we remain confident in our strategic direction, grounded in strong underwriting, disciplined risk management, and ongoing operational improvement. With a solid financial foundation and a clear focus on long-term value creation, we are well-positioned for sustainable and profitable growth. Thank you. Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, you may do so. The first question today comes from Kenning Zhao with Norton Andrews. Please go ahead. Kenning Zhao: Hi. I'm Kenning from Norton Andrews. Congratulations, and thank you for the great performance in the first quarter. Well, my first question is there's strong growth in your business, both in new loan origination and active users. You mentioned there will be further growth. I wonder if that means you like the current macroeconomic environment and the loan market? And, well, it's not big, but the delinquency rate has also ticked up a little bit compared to the end of last year. If the loan volumes continue to grow, should we expect further increases in the delinquency rate? And, oh, can I have a second question? Can we get this first question answered first, and then you can ask me the next one? Kent Li: Of course. Thank you. Responding to your, I think you mentioned several questions in your comments. So let's focus on them one by one. The first one, how we view the current environment. I think our company has never tried to grow our portfolio for the sake of growth. So we are always trying to manage our portfolio based on our assessment of the future environment. That being said, I think right now, based on our historic trend and our analysis, the overall environment is still good for portfolio growth. That is why we are still focused on growth at this moment. Another thing is that since the second half of last year, we have invested a lot in acquiring new customers. So as these customers mature in our portfolio, we are able to offer them better lines and better products, so they stick with us longer. That is also the best foundation for our growth. In terms of the delinquency rate, I think the reason you see an uptick from the lower level we achieved somewhat last year is that I would say that probably was the bottom part of our delinquency rate. So even with this uptick, I think our delinquency rate with regard to our portfolio is still very healthy. So we are not particularly concerned about that. And going forward, we do expect that our delinquency rate will still have some uptick, but those upticks will be more than offset by our overall scale. That basically means that our profit will not be impacted by a certain frequency. Frank Fuya Zheng: Let me add also regarding the delinquency rate. That number is actually as a risk profile situation from last quarter to Q1 is actually stable. And the number is a little bit skewed, and if you take another look, if you look at our Q1 income statement under the operation expense cost expenses, the first one is automation and services. It's basically operation expenses. The second one is the marketing acquisition, customer acquisition. And the third one is general and administration cost. So those are the three general costs. But the rest, like provision this way and provision that way, if you add up together, this is all risk-related cost. If you add up this quarter, Q1, and you add up Q4 last quarter, all the provisions together, you will find the Q1 provision is about RMB 60 million less than last quarter. But the amount is RMB 60 million actually, because this RMB 57 million is related to our own insurance business, which means because our own insurance business, the revenue you book in one period and the cost you book the whole thing together in one time. Because last quarter, Q4, they did more, well, you know, first the guarantee company did more business so they have more of that. So if you take out this RMB 57 million, actually, the cost apple to apple, the cost related to, you know, you take out all the, you know, the risk related to the guarantee business, actually, we have a, like, RMB 3-4 million less cost on Q1 compared with Q4. So overall, the conclusion is, you know, the risk situation remains basically the same. Not much better, not much worse. That's the thing. But having said that, we all expect because this regulatory development will be coming in October, we will prepare and there will be costs because of that, there may be some uptick, you know, cost risk situation with some uptick down the road, but not in Q1. Not in Q2. We haven't found this situation change much at all. That's why we continue to invest a lot in customer acquisition also. Kenning Zhao: Thank you for the detailed answer. Well, my second question is about the repurchase. You haven't repurchased any shares in the first quarter, but you have approved another share repurchase program. Just wondering if you repurchased any, like, during April's market volatility, and should we expect you to continue the aggressive stock buybacks as you did last year? Thank you. Frank Fuya Zheng: Yes. Because Q1 has no open window, so we usually do the buyback during the open window from the old shareholders. Right now, I mean, the incoming open window, we pretty much show, you know, the remaining, almost RMB 60 million is locked, it will be used up in the coming open window, and we will very likely kick into the buyback during the, you know, down window period also. So that's why we have this newly authorized RMB 100 million to cover that. I hope it answers your question. Kenning Zhao: Yes, sir. Thank you very much, and thank you again for the wonderful call. Operator: The next question comes from Alex Ye with UBS. Please go ahead. Alex Ye: Hi. Good evening, management. Thanks for taking my question. It's Alex from UBS. So I have two questions, if I may. So the first one is regarding your loan growth guidance for the next quarter. Is it still going to be a bit of a good growth? Just wondering, what's driving the growth behind and how do you see, you know, the underlying loan application or credit demand in the last two months in April or May? Have you seen any suffering trend given a lot of the noise on the macro front? And the second question is a bit on your funding supply. So given, you know, there has been this new regulatory announcement since April, I'm wondering, have you heard any feedback from your funding partners with regard to their attitude towards this loan pricing, which is going above 24%? And then do you see anything we need to adjust in our current purchase order to ensure that we're more compliant? Thank you. Kent Li: Okay. I'll first answer the first question about the growth. As I mentioned to the last investor, our growth has always been based on our assessment of the upcoming risk environment. So at this moment, I think that the way we grow our portfolio has always been acquiring new customers, getting the customers on board, and gradually introducing them to better products, which largely means lower fees and higher lines. Our growth has largely grown from this strategy. So you asked about April or May or June. Our growth path has always been like that. In terms of our funding institutional partners, right now, we are in very close conversation with them about the upcoming changes. And at this moment, what I can say is that we expect there will be changes. We are going to make some adjustments, but I don't see our company has always been confident we will be fully compliant with the new regulation before the October 1st deadline. So we are not particularly concerned about that. That being said, any new regulation will always bring some small shocks to the industry. So we do expect that there will be some shocks in our industry. It's just that I think our company is in a very good position to take those shocks. So our growth, I think our growth prospect will not be changed based on whatever we are providing to the investors. Frank Fuya Zheng: Hi, Alex. First of all, welcome to our earnings call. Welcome. Regarding the, let me just basically ask the same question again. And I think we really took advantage of the good risk environment since the second half of last year. So our run rate is, you know, at the end of last year, it's already pretty high, and you saw that we spent very aggressively in acquisition in Q1, and we will keep the same pace in the acquisition effort in the second quarter. So based on our current forecast, we look to Q2 this year, we are ahead of, you know, 30% the gross volume growth for this year. But we are not, you know, not have no intention to increase the forecast anytime soon because we will, you know, see when in Q3, you know, what's the effect, you know, the regulatory policy impact on the industry. So the YCAA, you know, they look at the insertion regarding Q4 volume, and that's what I'm trying to say. And so overall, I think we are confident to achieve 30% volume growth for this year. But other than that, maybe not more, it's all because Q4 volume is kind of in limbo right now. Regarding the preparation for the new regulatory, possible regulatory impact, we do some, you know, talking to the people and, you know, talking to the regulatory mostly our institutional partners, and with some regulatory authorities. And we are preparing some, you know, technology-wise, you know, if the deal there's no new policy can come down, and we can accommodate it very quickly, efficiently, you know, from technology operation-wise. Other than that, we, you know, like anybody else, we don't know much of what's going to come down. Thank you. Alex Ye: Understood. Thank you very much. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Victoria Yu for any closing remarks. Victoria Yu: Thank you, everyone, for joining us today. If you have additional questions, please reach out to our Investor Relations team directly. We appreciate your interest and look forward to speaking with you again soon. Operator: Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Where to invest $1,000 right now When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor's total average return is 975%* — a market-crushing outperformance compared to 172% for the S&P 500. They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor. *Stock Advisor returns as of May 19, 2025 This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. 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Yahoo
10-05-2025
- Business
- Yahoo
Piraeus Financial Holdings SA (BPIRF) Q1 2025 Earnings Call Highlights: Strong Profit Growth ...
Release Date: May 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Piraeus Financial Holdings SA (BPIRF) reported a strong net profit of EUR 284 million for Q1 2025, marking a 22% increase year-on-year. The company achieved a return on average tangible book value of 14.7%, surpassing the 2025 target of approximately 4%. Asset quality remains solid with a non-performing exposure (NPE) ratio at 2.6% and a historic low cost of risk at 35 basis points. The loan book expanded by EUR 1.1 billion in Q1 2025, continuing the strong momentum from 2024. Piraeus Financial Holdings SA (BPIRF) increased its assets under management to EUR 12.5 billion, already exceeding the 2025 target. Net interest income declined by 7% annually due to a material drop in interest rates. The company faces potential capital volatility from its securities book, which was not booked in amortized cost. There is uncertainty regarding the impact of Basel 4 and other regulatory changes on capital ratios. The mortgage market growth is expected to be moderate, with some initiatives progressing slower than anticipated. Further reductions in net interest income are expected in the coming quarters due to the normalization of base rates. Warning! GuruFocus has detected 8 Warning Signs with BPIRF. Q: What is the rationale behind the choice of not booking the increase in the securities book in amortized cost, and how are you managing potential capital volatility from these positions? Also, could you clarify the capital impact from the acquisition of ethnic insurance? A: The decision was to book the new additions under the OCI book with corresponding hedging instruments to avoid volatility. The capital impact from the ethnic insurance acquisition is expected to be between 150 and 160 basis points, with potential application of Article 49 of CRR3, though not currently in the primary plan. Q: How should we think about credit expansion seasonality across the year, and can you provide any insights into the current lending pipeline or changes in customer behavior? A: The first quarter was particularly strong with significant transactions setting the tone for the year. We are not upgrading our full-year guidance yet but remain vigilant. The retail consumer market is positive, and we expect moderate growth in the mortgage market by year-end. Q: How does the business outlook change if rates go below certain levels, and what are the drivers behind the increased NII sensitivity this quarter? A: The increased sensitivity is due to the unfreezing of mortgages, which are now sensitive to rate cuts. The assumed pass-through of rate cuts into time deposit costs is at 60%, currently at 52%. We expect the NII guidance to hold even with rate cuts, as growth is expected to mitigate any potential drop. Q: What is the outlook for NII in the coming quarters, and how do you see loan growth shaping up after a strong Q1? A: The book is still normalizing to new rates, and further NII reduction is expected, but growth will mitigate part of the drop. We are reconfirming our guidance of 2.6 billion in net credit growth for the year, with strong dialogue across various sectors. Q: Can you clarify the magnitude of living expenses related to Snappy in Q1, and what should we expect regarding servicing fees in the coming quarters? A: Snappy-related expenses in Q1 were $5 million, and this is expected to continue. Servicing fees are expected to see a mild reduction, having normalized to current levels. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
