M&T Shares Tumble After Earnings Miss, Lower Expectations
July 18 2019 - 3:05PM
Dow Jones News
By Allison Prang
Shares of M&T Bank Corp. fell 4.3% Thursday afternoon after
the company said it expects its net interest income to increase
less than previously forecast due to lower interest rates.
M&T's forecast is the latest example of how the Federal
Reserve's pivot to possibly lower rates is affecting banks across
the spectrum. When the Fed lowers rates, banks are limited with
what they can charge in interest on loans, which can hurt their
earnings.
M&T's finance chief Darren King said every
quarter-percentage-point cut to rates should pressure M&T's net
interest margin -- an important measure of bank profitability -- by
between 0.05 and 0.08 percentage point the year after. He said the
company still expects net interest income to grow year over year,
but said M&T will look at its costs.
"With the revenue outlook being more subdued than we previously
thought, we're examining our spending as we look forward," Mr. King
said.
Earlier this week, JPMorgan Chase & Co. lowered its
lending-profit guidance and Bank of America Corp. said any rate
cuts from the Fed could hurt net interest income growth.
"Even if they decrease rates at the end of July, we're likely
still to see a little bit of movement in deposit rates," Mr. King
said. "And then as we go from there, we'll start to see them come
down."
The Buffalo, N.Y.-based lender reported second-quarter earnings
Thursday that missed analysts' estimates. The company's net income
fell due to higher expenses. Costs included a $48 million charge
from M&T agreeing to sell its interest in an asset manager,
which hurt profit by 27 cents a share.
(END) Dow Jones Newswires
July 18, 2019 14:50 ET (18:50 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
M and T Bank (NYSE:MTB)
Historical Stock Chart
From Mar 2024 to Apr 2024
M and T Bank (NYSE:MTB)
Historical Stock Chart
From Apr 2023 to Apr 2024