Trust in Global Financial Institutions - Thomson Reuters TRust Index Third-Quarter 2013 Results
(Thomson Reuters ONE) -
* Trust in global financial institutions remains negative overall, but
regional differences widen
* Divergence between positive analyst earnings and investors discounting
growth still evident
* Level of regulatory activity accelerating and doubled since the Dodd-Frank
Act
NEW YORK, October 16, 2013 - Thomson Reuters, the world's leading source of
intelligent information for businesses and professionals, today announced the
results of its proprietary TRust Index showing that trust in the Top 50 Global
Financial institutions remained negative in the third quarter, according to news
and social media sentiment analysis, but regional differences have widened since
the second quarter. Financial metrics indicate increased confidence in the
sector, but regulatory activity shows no sign of abating.
Tracking the Top 50 Global Financials for the third consecutive quarter of TRust
Index metrics, the third quarter saw a continuation of several trends observed
throughout 2013, among them a steady improvement in sentiment in news and social
media (essentially stable for the third quarter); continued confidence in
analyst expectations for the sector; the divergence between investors and
analysts still evident; and proliferation - even acceleration - of regulatory
activity.
"Our ongoing monitoring of key metrics on trust in the global financial industry
reveals that at five years post-crisis financial institutions are stronger, more
stable," said David Craig, president, Financial & Risk, Thomson Reuters. "Whilst
social media sentiment analysis shows trust is still negative for the quarter,
for the first time since January, European Financials have moved higher than US
Financials, reflecting recent mortgage scandals in the US and increasing
confidence in UK and European institutions."
Tracking trust through news and social media sentiment revealed a media
sentiment score of -1.5% for the Top 50 Global Financial institutions for the
quarter, level with the second quarter's -1.5%. On a regional level, there
continue to be subtle but important shifts. The institutions in Europe/UK saw
modest third-quarter improvement in trust sentiment from -1.5% to -1.0%, and are
now on par with the Asian institutions which have led in trust scores for
virtually all of 2013 (at -1.0% for both quarters). At -1.6% the institutions
in North America were flat for the quarter, but had the lowest levels of
confidence overall.
Movement in the trust sentiment scores over the quarter appears driven by a
range of factors and events.
* The August Justice Department suit against Bank of America over mortgage
fraud and record JP Morgan settlement in September most affected
institutions in the Americas.
* ECB signals that it would not allow money market rates to rise too high due
to fears of Fed rate rises and general positive sentiment about
privatization of UK banks continued to support the increased trust in
European banks.
* In Asia, ongoing concerns about the strength of the economy and shadow
banking in China appear to have the greatest impact on overall trust
sentiment for banks in the region.
Other features of this quarter's TRust Index follow below; please click here for
further insight and data:
The Confidence of the Marketplace - Investors and Analysts
* Third-quarter earnings growth estimates for the Financials sector regained
their top spot during the quarter (having slipped to second in the second
quarter) based on high analyst expectations. At 9%, earnings growth
estimates for the sector are lower this quarter (17% in the second quarter),
but still well ahead of the other S&P 500 sectors.
* According to Thomson Reuters StarMine, analysts forecast a forward 5-year
growth rate for the Top 50 Global Financials of 9.0% (compared with the
first-quarter forecast of 7.9% and the second quarter at 8.1%), and above
their 8.0% expectations for the S&P 500. Although we are still seeing
investors discount growth, with market implied growth rates far below
analyst expectations, third-quarter figures show a slight improvement on the
second quarter. The Top 50 Global Financials achieved a 7.4% price increase
over the quarter, above both the S&P 500 and Thomson Reuters Global Index.
* Aggregate changes to analyst recommendations over the quarter for the Top
50 Global Financial institutions show that downgrades outnumbered upgrades
across all regions. While the Asian institutions scored the highest number
of upgrades, these were outpaced by the number of downgrades - again,
increasing concerns about Chinese banks appear to be having a particularly
strong influence.
Counterparties: Credit Spreads as an Indicator of Trust
* In the third quarter, credit default spreads continued a long-term
tightening trend, reflecting an overall increase in confidence among our Top
50 Global Financials in pricing the relative risk of doing business with
each other. Asia continued to have the tightest spreads, with Europe the
widest. The average spread for the Top 50 Globals, at about 140 basis
points, is far below 2011's high of nearly 350.
Regulation as a Barometer of Trust
"The proliferation of regulatory activity over the past five years, and its
clear implications for the financial sector in terms of managing compliance,
shows no sign of receding," added Scott McCleskey, global head of regulatory
intelligence, Financial & Risk, Thomson Reuters. "In fact it looks to be
accelerating, as the number of average daily alerts has doubled since the Dodd-
Frank Act."
* The level of regulatory activity worldwide continued its strong upward trend
this quarter. The average daily number of regulatory alerts tracked by
Thomson Reuters Accelus rose to 110, roughly double the daily average for
the same quarter in 2010, and at the end of the third quarter stood at
nearly 19,000 alerts for the year.
Tracking Controversy and Governance as Factors in Rebuilding Trust
* Thomson Reuters ASSET4 environmental, social and governance data, shows that
a high level of controversies have been reported for the Top 50 Global
Financials relative to the Financial Sector as a whole, but that adoption of
processes and governance to address responsible marketing practices, improve
fair competition and avoid bribery and corruption, all continue to be
priorities.
Thomson Reuters TRust Index leverages proprietary data analytics, news and
social media sentiment analysis. This latter indicator draws on over four
million business and financial news and media sources to track the state of
trust in the Top 50 Global Financial institutions. This two-minute video
explains further how the measures in this quarter's TRust Index relate to the
state of trust in the global financial market place over the quarter. Please
click on first quarter 2013 and second quarter 2013 for previous results.
Sources: Thomson Reuters ASSET4, Thomson Reuters Business Classification (TRBC),
Thomson Reuters Datastream, Thomson Reuters I/B/E/S, Thomson Reuters MarketPsych
Indices, Thomson Reuters News Analytics (TRNA), Thomson Reuters StarMine
Quantitative Models
About Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for
businesses and professionals. We combine industry expertise with innovative
technology to deliver critical information to leading decision makers in the
financial and risk, legal, tax and accounting, intellectual property and science
and media markets, powered by the world's most trusted news organization. With
headquarters in New York and major operations in London and Eagan, Minnesota,
Thomson Reuters employs approximately 60,000 people and operates in over 100
countries. Thomson Reuters shares are listed on the Toronto and New York Stock
Exchanges. For more information, go to http://thomsonreuters.com.
CONTACT
Lemuel Brewster
PR Director for Investors
Thomson Reuters
+1 646 223 5147
lemuel.brewster(at)thomsonreuters.com
Lauren Herman
Thomson Reuters
+1 646 223 5985
lauren.herman(at)thomsonreuters.com
Clare Arber
Head of PR for Financial Services Content
Thomson Reuters
+44 20 7542 6256
clare.arber(at)thomsonreuters.com
Keywords:
Thomson Reuters TRust Index
TRust Index
Thomson Reuters Trust Index
Trust Index
Trust in the Global Financial Marketplace
Trust of the Global Financial Marketplace
Trust and the Global Financial Marketplace
Trust and Financial Marketplace
Trust in the Financial Marketplace
Trust in the Financial Community
Trust and the Financial Community
Trust Benchmark
TRust Benchmark
Press release PDF:
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Source: Thomson Reuters Corporation via Thomson Reuters ONE
[HUG#1736048]
Unternehmensinformation / Kurzprofil:
Datum: 16.10.2013 - 12:55 Uhr
Sprache: Deutsch
News-ID 306381
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