3 Bank Stocks With More Than 30% Growth in 2024: More Room to Run?

Industry Overview - The US economy started 2024 strong due to a robust labor market, increased consumer spending, technological advancements, and optimism over potential interest rate cuts by the Federal Reserve [15] - As interest rates decrease, funding/deposit costs are expected to stabilize and decline, supporting expansions in banks' net interest income (NII) and net interest margin (NIM) [18] - The US presidential election results fueled optimism around banks due to anticipated tax cuts, favorable regulations, and expansionary fiscal measures, stimulating economic growth [18] - Major banks like Wells Fargo, Citigroup, and Bank of America rose more than 30% in 2024 [16] - Banks have increased capital distribution activities after the clearance of the 2024 stress test and are diversifying revenue streams to reduce dependency on spread income [5] - Several banks are acquiring or forming partnerships to strengthen non-interest income and venture into the lucrative private credit business [5] - Banks are adopting digital technologies to enhance client experience and online presence to capture a rising mobile banking population [6] - Buyouts and collaborative efforts to deepen global presence and diversify revenue streams will further bolster fee incomes [6] - Weakness in asset quality is likely to persist in certain portfolios, especially in commercial real estate loans, but banks still have room to grow [19] Wells Fargo (WFC) - Lifting the asset cap will mark a turning point for Wells Fargo, allowing the bank to offer loans without restrictions and supporting its top-line expansion and long-term growth [1] - Wells Fargo significantly raised advisor retention in its wealth and investment management division and emphasized serving consumer banking clients and independent advisers [8] - The company aims to expand its treasury management business and provide clients with investment banking and market capabilities in the Commercial Bank division [8] - Wells Fargo's NII and NIM have been subdued by increased funding costs due to the high-interest rate environment, with management expecting 2024 NII to drop 9% year-over-year [9] - The company is diverging revenue sources and reducing reliance on NII, methodically strengthening its corporate investment bank [29] - Wells Fargo is in the final stages of meeting regulatory requirements to remove the $1.95-trillion asset cap imposed in 2018, which could be lifted in the first half of 2025 [32] - The Zacks Consensus Estimate for WFC's 2024 and 2025 revenues is$82.6 billion and $83.6 billion, suggesting a 0.02$5.28 and $5.49, implying a 2.8$2-$2.5 billion by the end of 2026 [24] - The Zacks Consensus Estimate for C's 2024 and 2025 revenues is$81 billion and $83.3 billion, implying a 3.2$5.88 and $7.21, indicating a 2.7$1.06 trillion, increasing modestly from the end of September 2023 [27] - The Zacks Consensus Estimate for BAC's 2024 and 2025 revenues is $101.8 billion and$106.5 billion, suggesting a 3.3% year-over-year increase and 4.6% growth, respectively [3] - The Zacks Consensus Estimate for BAC's 2024 and 2025 earnings per share is $3.27 and$3.67, indicating a 4.4% year-over-year decline and 12.3% growth, respectively [14]