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Saul Martinez
HSBC (head of US financials research)
First call on the ledger
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else is a labeled paraphrase. Every call links its original source. Before you trust the call, check the record.
Where they stand
Views on the record but not scoreable bets: no single number and deadline to grade. Shown in their exact words, never scored.
After 'exceptional' Q2 bank results: 'in the absence of a market correction, a significant one and or economic weakness, it's not clear that there's anything that's near us that is going to derail this train' @36:34-36:47; he concedes 'there is a risk of complacency' @36:50 and flags funding-cost pressure and ever-higher comps as the watch items @37:23-38:44.
“But again, it is, you look at the backdrop and it doesn't seem like there 's anything that's really going to derail this train at this point.”
'there's too much focus on the financial margin and not enough focus on the revenue growth' @39:15; 'I think the results improve into the second half of the year. And the stock, the valuation is at a bit of a discount to their peers' @39:32-39:42; also 'PNC had good numbers as well. So we're generally constructive' @39:59.
“So it is still our top pick. But we like the group broadly. We like the regional banks here.”
'This was a really good quarter. It was that they didn't raise their full year profitability target' @40:46-40:51 (11% ROTCE guide vs 13% delivered in H1); he reads the guidance hold as front-loading investor-day investments that 'position them well to maintain what has been really good business momentum' @41:36-41:43.
“And I don't think there is an issue with I think what they're doing is they 're taking advantage of the strong results and investing, investing for growth”
After calling the quarter almost a perfect storm of good economic backdrop, high real rates and booming deal-making (@16:40), he flags the peak: continued growth is hard to envision and deposit cost pressure is the mundane risk: If that starts to eat away at the net interest income growth in the second half of the year and next year, that's also something that could derail the positive thesis @23:33, citing Wells Fargo's funding-cost concerns. On AI in banks he adds excess returns can last a long time and first movers could have significant advantages here @26:47.
“It is hard to envision, you know, continued growth off of the base we're on.”
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