UPDATE 1-US banks to suffer real estate losses in Q3: Fox-Pitt
Oct 9 (Reuters) - Analysts at Fox-Pitt Kelton said U.S. bank losses will be primarily concentrated in residential real estate, with some early signs of spillover into commercial real estate, commercial and industrial portfolios.
"We believe we are still in the early-to-middle part of the cycle, as we estimate about 28 percent of cumulative charge offs have been realized through the second quarter of 2009," analysts said in a note to clients.
They said although recent capital raises have improved bank balance sheets, capital needs are still an issue for some given continued credit pressures and weaker earnings power.
Investor focus on normalized earnings will likely increase in the days to come, the analysts said.
"While we expect capital and credit concerns will remain top of mind for investors, we believe the market has begun to increasingly look beyond legacy problem assets to assess bank earnings in a normalized environment," they said.
The analysts said bank capital levels should be helped by smaller unrealized loss positions as credit spreads continue to tighten, and slower growth in assets.
Fox-Pitt analysts lowered their third-quarter estimates for 17 banks in their coverage universe -- including Citigroup Inc (C.N) -- and raised their third-quarter view on 10 banks, including that of Bank of America Corp (BAC.N).
"Overall, we expect earnings shortfalls versus consensus at 39 banks, 8 to meet and 25 to beat," the analysts said.
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(Reporting by Sakthi Prasad in Bangalore; Editing by Unnikrishnan Nair)
((sakthi.prasad@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: sakthi.prasad.reuters.com@reuters.net)) Keywords: USBANKS/RESEARCH FOX PITT KELTON Keywords: USBANKS/RESEARCH FOX PITT KELTON Keywords: USBANKS/RESEARCH FOX PITT KELTON
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