UPDATE 1-M.Stanley ups Q4, 2009 loss view for mid-sized US banks
March 6th, 2009 | by admin |Jan 9 (Reuters) – Morgan Stanley increased itsfourth-quarter and 2009 cumulative loss estimate for U.S.mid-sized banks on higher credit losses and said several bankswill be unprofitable in 2009.
The brokerage estimates provision expense for mid-sizedbanks in its coverage universe to average just more than $2billion per quarter through the end of 2009, as risingconstruction loan losses and weakening commercial creditsprompt further reserve build.
Banks with sizable construction and commercial exposureappear most at risk of an earnings miss in the fourth quarter,said analyst Ken Zerbe, who revised his fourth-quarterestimates on 25 mid-sized banks. [ID:nWNAB8276]
Zerbe said East West (EWBC.O ), First Horizon (FHN.N ),Marshall & Ilsley (MI.N ), South Financial (TSFG.O ), UCBHHoldings (UCBH.O ) and Zions Bancorp (ZION.O ) could see eitherthe largest credit losses or reserve build in the next fewquarters.
Zerbe downgraded East West to “equal-weight” from”overweight” and said, “We are mostly concerned with thenear-term performance of the company’s large Californiaconstruction portfolio.”
The analyst also expects several banks to cut theirdividend in 2009 due to lower earnings power. (Reporting by Sweta Singh in Bangalore; Editing by PratishNarayanan)