Outlook Darkens For Big Banks

For major banks, the next few years will be a return to a simpler and possibly less-profitable time.

The subprime crisis and ensuing credit crunch have thrown a wrench into the highly profitable bank business model: Make loans that are then sold off to investors while arranging corporate financing through off-balance-sheet vehicles that keep banks' capital costs down.

Now, banks are holding on to more of the loans they make, as they did years ago. And the off-balance-sheet lending business is crippled. It isn't clear how long this will last, or how the banking model might evolve in response to the current market crisis. What is clear is that some of the banks' more profitable lines of business have been shut, either temporarily or permanently.

The upshot: Bank investors expecting a big rebound in earnings growth after the debacle of 2007 will likely be disappointed. The slowdown is likely to be especially pronounced at some of the biggest banks, such as Citigroup Inc. Bank of America Corp. and J.P. Morgan Chase & Co.

Just how bad the earnings slowdown could be is tough to gauge. That is because the changes hit banks on a number of different levels: Less securitization means lower fee income; more loans on the balance sheets mean higher capital charges; bigger balance sheets mean less capacity to make new loans.

But the overall impact is expected to be negative. Through 2006, the three big banks' average annual profits had grown at a roughly 20% clip during the past three years, according to data provider Capital IQ. That is likely to slow significantly, analysts say.

Through 2009, the three banks' combined earnings are expected to be just 5.5% higher than they were at the end of 2006, according to some analyst forecasts.

'Banks are going to have to think real hard about what their new business model is,' said Christopher Whalen, managing director at Institutional Risk Analytics, a banking research firm. 'It was a different world when they could just set up another [off-balance-sheet vehicle] and put this stuff out there. It gave them unlimited flexibility in balance-sheet management.'

Investors also will have to contend with another unsettling phenomenon -- bank profits that may swing wildly from quarter to quarter. That is because banks are using market values for more of the assets they hold on their books, meaning their prices fluctuate like those of stocks.

That will be a big adjustment both for bank executives and for investors, who are used to thinking about the long-term intrinsic value of debt, rather than how much it can fetch if sold today. That has led to repeated write-downs at big institutions such as Citigroup and UBS AG.

Banking observers aren't uniformly downbeat. 'I'd be reluctant to say the whole securitization market is going to fade away or depress earnings for an extended period of time,' said Bill Fitzpatrick, an equity analyst at Optique Capital Management, which owns stocks such as Citigroup and Bank of America.

Plus, banks have proved remarkably resilient in recent decades in figuring out new ways to make money. There also may be a silver lining: Banks may end up in better shape if weaned from an over-reliance on securitization, said Gerard Cassidy, an RBC Capital Markets analyst.

The originate-and-sell business model 'encouraged reckless lending' that triggered the current mortgage morass, Mr. Cassidy said. Keeping loans on banks' books will help avoid future meltdowns that could torpedo years of profits.

Meantime, changes being wrought to the banking business model are quickly becoming apparent. Citigroup has seen the amount of loans and leases it holds in inventory -- and doesn't plan to sell to investors -- increase to about $697 billion at the end of September, up about 9% over six months, according to data from IRA.

The bank's portfolio of loans and leases it would like to sell, but has yet to do so, more than doubled over the same six-month period to about $42 billion at the end of September.

At J.P. Morgan Chase and Bank of America, loans and leases held for inventory increased by 11% and 9%, respectively, in the six months ended Sept. 30, according to IRA.

Commercial and industrial loans at commercial banks in the U.S. have risen about 20% since the start of the year to about $1.43 trillion this month, according to Federal Reserve data.

That rise has come at the same time as a fall in commercial-paper issuance by off-balance-sheet conduits typically sponsored by banks. These vehicles issue short-term commercial paper to purchase debt such as corporate receivables, mortgages and auto loans, capturing the difference in rates between the two. The amount of this paper outstanding fell to $763 billion as of Dec. 19 from a peak of almost $1.2 trillion in August.

Banks have traditionally used such conduits, which are close cousins of the now-infamous structured investment vehicles, to arrange lending without having to set aside regulatory capital. With that market shrinking, banks have to hold on to more of the loans they make.

Making matters worse, a securitization hiatus deprives banks of fees they used to collect for originating loans, packaging them into securities and selling them to investors, said Michael Poulos, a managing director at financial consulting firm Oliver Wyman.

Banks are likely to make up for those lost fees by increasing the interest rates they charge on loans, Mr. Poulos added. But that will diminish companies' ability to take on debt, which could hurt the wider economy.

'Lending is going to be tight for the next year or two,' said David Hendler, an analyst at CreditSights Inc.

The biggest U.S. banks are likely to suffer more than their smaller peers, which relied less on securitization, said David Fanger, chief credit officer for financial institutions at Moody's Investors Service.

In fact, the lack of a securitization market could help midsize banks.

In recent years, the intense demand for asset-backed securities fueled a lending boom that let big banks offer more generous terms on loans. Today, 'it now makes it easier for these [smaller] banks to compete,' Mr. Fanger said.

对许多大银行来说，未来几年可能会回到业务模式较为单一、利润可能也较低的时代。

次级债危机和随之而来的信贷危机已经破坏了银行的高利润业务模式。这种模式是：先发放贷款然后再将债权出售给投资者，同时通过表外投资工具为企业安排融资，从而将银行的资金成本保持在较低水平。

现在银行又恢复了多年前的做法，将更多贷款的债权保留在自己手中。表外贷款业务损失惨重。这种情况会持续多久，或是银行业务模式会有何变化以适应当前的市场危机，人们尚不得而知。没有疑问的是银行一些更有利可图的业务都停掉了，不管是暂时的还是永久的。

结果是：期望银行业在2007年的大崩溃之后收益增长能大幅反弹的投资者可能会大失所望。花旗集团(Citigroup Inc.)、美国银行(Bank of America Corp.)和摩根大通公司(JPMorgan Chase & Co.)这些规模最大银行的增长减缓可能更为突出。

收益滑坡的程度很难估计。原因在于种种变化对银行的影响是多层次的：证券化程度降低意味着手续费收入减少；更多贷款被计入资产负债表意味着资本支出的增加；而资产负债表扩大意则味着发放新贷款的能力降低。

但人们认为整体而言这些影响将会是负面的。数据提供商Capital IQ称，2004至2006年的三年中，三家大银行的平均年利润每年增长20%左右。分析师们认为，这个速度会大大降低。

据一些分析师预测，到2009年末，三家银行的利润之合将只比2006年底增长5.5%。

广告银行研究公司Institutional Risk Analytics的董事总经理克里斯托弗•瓦伦(Christopher Whalen)说：“银行必须得好好考虑自己的新业务模式。那会儿它们只需另建一个表外投资工具，把不那么优质的资产统统放进去了事。那时它们在资产负债表管理方面拥有无限的灵活性。”

投资者还得应对另一个令人不安的现象──银行每季度的利润变化可能会很大。那是因为银行将更多依据市值来计算其表内资产的价值，从而令这些资产的价值像股价一样起伏不定。

无论是对银行管理层还是投资者而言，这都是很大的调整，他们以往都习惯于盘算债权的长期内在价值，而不是马上脱手的话能保住多少。新情况已导致花旗和瑞士银行(UBS AG)等一些大机构一再进行资产冲减。

银行业观察人士并非都持悲观态度。Optique Capital Management的股票分析师比尔•费茨帕特里克(Bill Fitzpatrick)说：“我不想说整个证券化市场都将走向衰落，或是在很长时间内收益不佳。”Optique Capital Management拥有花旗和美国银行等机构的股份。

不仅如此，事实证明近几十年中银行在挖掘新的创收途径方面回旋余地很大。RBC Capital Markets的分析师杰拉德•卡西迪(Gerard Cassidy)说，也许还有一线希望，如果银行不再过分依赖证券化，以后的情况可能会好一些。

卡西迪说，“贷款一发放债权就卖”的业务模式鼓励了草率放贷，引发了当前的抵押贷款危机。将贷款保留在银行帐面上将有助于避免可能会使今后数年利润受到损害的严重灾难。

对银行业务模式进行调整的效果正在迅速显现出来。IRA的数据显示，截至9月底花旗集团留在手中不准备出售的贷款和租赁物债权已增加到约6,970亿美元，较6个月前增长了约9%。

截至9月底，花旗拟出售但尚未出售的贷款和租赁物债权增加到约420亿美元，较6个月前增长了一倍多。

IRA的数据显示，截至9月30日，摩根大通公司和美国银行留在手中不准备出售的贷款和租赁物债权分别比6个月前增长了11%和9%。

美国联邦储备委员会(Federal Reserve)的数据显示，本月美国商业银行发放的商业和工业贷款已增加到约1.43万亿美元，较年初增长了约20%。

在银行放贷增长的同时，通常由银行创办的表外管道所发行的商业票据却减少了。这些表外工具发行短期商业票据，用获得的资金购买企业应收帐款、抵押贷款和汽车贷款等，从二者间的息差中获利。截至12月19日，未偿还商业票据已减少到7,630亿美元，而8月份高峰时则有1.2万亿美元之多。

一直以来银行都是通过这些与目前臭名昭著的结构性投资工具(SIV)类似的管道来安排放贷，这样做它们便无需相应增加自有资金的数量，以便使自己的资本充足率继续符合监管机构的要求。随着商业票据市场的萎缩，银行不得不将更多贷款债权留在手中。

金融咨询公司Oliver Wyman的董事总经理麦克•普罗斯(Michael Poulos)指出，更糟糕的是，证券化之路被堵死使银行无法象从前一样从发放贷款、将它们打包成证券并销售给投资者这个过程中收取费用。

普罗斯补充说，银行很可能会上调贷款利息来弥补收费上的损失。但是这会降低企业的举债能力，进而对更大范围的经济领域造成影响。

CreditSights Inc.的分析师大卫•亨德勒(David Hendler)说，在未来一两年里信贷会收紧。

穆迪投资服务公司(Moody's Investors Service Inc.)负责金融机构业务的首席信贷长大卫•方格(David Fanger)指出，美国的大银行很可能会遭受比中小银行更大的打击，后者对证券化的依赖较小。

事实上，证券化市场的缺乏可能会有益于中型银行。

近年来，市场对资产担保证券的巨大需求推动放贷额大幅增长，大银行也相应放宽了贷款条件。方格说，目前的状况更有利于中小银行参与竞争。

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