Jan 23 (Reuters) - Several analysts expect regional banks to cut dividend in 2009 amid further credit deterioration, as they continue to build reserves and tackle higher credit costs.
Citigroup analyst Keith Horowitz expects Comerica Inc (CMA.N) to cut dividend and post a loss in 2009, with provision for bad loans peaking in the year at $900 million, but said the large U.S. bank has significant capital cushion.
For M&T Bank (MTB.N), Horowitz believes the company is partly through the brokerage’s cumulative loss estimate of $3.5 billion for 2008 through 2010.
Analyst Kevin Pierre of Sanford C. Bernstein reversed his 2009 profit view on Fifth Third (FITB.O), citing higher credit costs and lower net interest margin.
With the economy showing little signs of improvement, analysts are cautious about the banking sector going into 2009 and believe that the main concerns will be credit quality and capital levels for the year. “We believe Fifth Third pulled some credit expense from the future into fourth quarter of 2008. We expect them to continue to aggressively confront the credit headwinds,” analyst Horowitz wrote in a note to clients.
Synovus Financial’s (SNV.N) Atlanta residential real estate market still remains of concern to analysts, and Paul Miller Jr of Friedman Billings Ramsey said the company’s already reduced quarterly dividend will be difficult to maintain. (Reporting by Sweta Singh in Bangalore; Editing by Anil D’Silva)