News USA Trust in Global Financial Institutions Stronger Over 2013
Thomson Reuters, the world’s leading source of intelligent
for businesses and professionals,
today
announced the latest results of its proprietary TRust Index showing that trust sentiment in the Top 50 Global Financial institutions finished the year stronger, but still negative, with
fourth-quarter
sentiment below that of the third quarter.
Analysis of
the Top 50 Global Financial institutions for the fourth consecutive quarter of TRust Index metrics revealed several trends observed throughout 2013, among them a regional convergence of news and social media sentiment; continued confidence in analyst expectations; and proliferation of regulatory activity.
information
“Throughout a year which saw dramatic improvement in markets and numerous headline events impact the financial industry, trust sentiment amongst news and social media, whilst still modestly negative, had recovered from 2012’s lows and stabilized,” said David
Craig, president,
Financial & Risk, Thomson Reuters. “Our data reveals a stronger industry, which enters 2014 within a much- changed landscape and an ever-increasing regulatory focus.”
Tracking trust through news and social media sentiment shows that the Top 50 Global Financials ended the year with a fourth-quarter trust score of -1.75 percent, down from -1.5 percent in the third quarter.
At the regional level, the top · The US government
institutions in Europe/UK scored the highest trust sentiment in the fourth quarter, ending the year at -1.25 percent, down from -1.0 percent in the third quarter. Institutions in the Americas scored lowest with -1.85 percent in the fourth quarter, versus -1.6 percent in the third quarter. The Asian institutions, which had led in trust scores for most of 2013, were down at -1.5 percent (-1.0 percent in the third quarter).
Headline events affecting trust sentiment scores over the fourth quarter included:
· Record mortgage- and LIBOR-related bank fines, penalties and settlements exacted by US and European regulators
shutdown; cuts to Asian GDP growth forecasts by the World Bank
· IMF and ECB activities around capital buffers, debt, leverage and risk
· The release of the approved Volker Rule on December 10, 2013.
The Confidence of the Marketplace – Investors and Analysts Fourth-quarter earnings growth estimates for the financials sector continue to show high expectations by analysts. Sridharan Raman, senior research analyst at Thomson Reuters, said, “At 22.4 percent earnings growth estimates for the sector, financials are just below telecommunications companies this quarter at 22.6 percent, but still well
Growth returns to the CFO agenda
Fifty-five percent of finance executives say their companies are focused on growth, according to the CFO Capital Confidence Barometer results released by EY, a leader in assurance, tax, transaction, advisory services and strategic growth markets. This is the highest figure since October 2011, when 61 percent were intent on growing.
Moreover, 60 percent of chief financial officers (CFOs) believe that the global economy is improving, which is a significant increase from 26 percent just one year
14
www.finance-monthly.com
ago. This renewed focus on growth is driven by an uptick in their confidence in the global economy.
“CFOs are clearly displaying guarded optimism,” said Tom McGrath, the EY Americas Senior Vice Chair – Accounts. “The price of growth is increased risk and it will fall on the shoulders of the CFO to balance this risk with the potential value these decisions can create over time.”
The report noted that CFOs’ views of important economic indicators are also on the rise. Some
of the most significant improvements are seen in economic growth, credit access and employment. The number of finance executives who are optimistic about economic growth has more than doubled to 63 percent from 30 percent over the past year.
This comeback of confidence is encouraging CFOs said McGrath, to refinance their obligations, pay down debt and look to engage in strategic dealmaking. However, CFOs and their organizations,
are taking
a disciplined approach to growth. Caution seems to dominate the boardroom
agenda,
with a high emphasis on risk management and efficiency/cost control.
One of the reasons CFOs appear more optimistic about the future is their sense that credit is more widely available today. This trend gives CFOs more options for financing deals. Sixty-seven percent of CFOs expect improvement in global deal volume over the next year, with acquisition appetites rising.
However, CFOs are playing it safe, with 61 percent looking to gain share in existing markets versus
ahead of all other S&P 500 sectors.”
According to Thomson Reuters StarMine, analysts forecast forward 5-year growth rate for the Top 50 Global Financials at 9.0 percent, above the 8.0 percent expectations for the S&P 500. However, we are still seeing investors discount growth, with market-implied growth rates at -2.1 percent. This is further reflected by a 4.9 percent price appreciation in the Top 50 Global Financials stocks over the quarter, below both the S&P 500 (9.3%) and Thomson Reuters Global Index (6.7%).
Aggregate changes to analyst recommendations over the fourth quarter for the Top 50 Global
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