Ally Financial, a top auto lender, also beat earnings expectations but saw its stock fall by about 3% on Wednesday.
Revenue dropped 4.8% to $1.5 billion, and net income fell 10.6% to $294 million, or 86 cents per share. Adjusted earnings were 97 cents per share, surpassing estimates of 64 cents per share.
Investors were likely concerned about the company's revised outlook for higher net charge-offs, which increased slightly to 1.45% to 1.50%, from 1.40% to 1.50% previously.
Synchrony, a leading store credit card provider, remained relatively flat, with its stock rising just 0.8% after reporting strong earnings.
Revenue grew 13% to $3.7 billion, and net income increased by 13% to $643 million, or $1.56 per share. Net interest income rose 7% year-over-year.
Despite higher provisions for credit losses and net charge-offs, Synchrony’s credit quality trends are improving, with net charge-offs expected to decline in the second half of the year.
So far this year, Ally and Synchrony have performed well, with stock prices up 24% and 36%, respectively. U.S. Bancorp, however, has underperformed, with a YTD return of just 4.5%.
Synchrony appears to offer the best value, but new regulations capping late fees on credit cards pose some uncertainty. Ally’s outlook remains clouded by concerns over credit quality and slowing car sales.
U.S. Bancorp stands out as a solid option, particularly due to its expense management strategy. The bank expects to reduce expenses by 11% in 2024, helping to maintain profitability. With an attractive 4.5% dividend yield, U.S. Bancorp emerges as the best option among these bank stocks.
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