Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


TRust Index Advances into Positive Territory for First Time

Thomson Reuters TRust Index Advances into Positive Territory for First Time

Thomson Reuters TRust Index Results – Second Quarter 2014

• Financial institutions in the Americas and Asia post gains in trust sentiment, whilst European banks continue to decline

• Lower earnings growth expectations indicate a less bullish outlook for the global Financial sector

LONDON/NEW YORK, July 17, 2014 – Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today announced the latest results of its proprietary TRust Index, showing that second-quarter 2014 trust sentiment in the top 50 global financial institutions continued to improve, as more banks – particularly those in the Americas - received positive scores to push the global TRust Index into positive territory for the first time since the index was launched in January 2013.

Tracking trust through news sentiment shows that the top 50 global institutions as a whole rose to score 0.5 percent (-1 percent Q1) in the second quarter, largely due to a substantial increase in trust scores for the Americas institutions, which rose to 5 percent (2 percent Q1). Institutions in Asia also received a positive score for trust sentiment in the second quarter, increasing to 1 percent

(-2 percent Q1). However, sentiment for European institutions fell to -5 percent (-2 percent Q1), as the European financial constituents of the TRust Index continued to suffer reputational damage from increasing regulation, customer issues, tax probes, lawsuits and fines.

“For the first time since the Thomson Reuters TRust Index's launch in January 2013, sentiment on the 50 largest financial institutions globally turned positive in Q2 2014,” said David Craig, president, Financial & Risk, Thomson Reuters. “Financial institutions in the Americas have led and built on this trend for the past two quarters, supported by strengthening economic and market conditions. Whilst this is encouraging news for our industry, we are not there yet. There is more work to do in Europe, which dipped into further negative sentiment as reputational damage from ongoing scandals, fines and concerns over the climate weakened the region’s results.”

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

Earnings growth estimates for the Financial sector of the S&P 500 are less bullish than previous quarters. Sridharan Raman, senior research analyst at Thomson Reuters, commented, “At -2.4 percent, the Financial sector has the lowest expected earnings growth rate this quarter of all sectors, mainly due to tough comparisons relative to last year. This is down from an expected 1.7 percent estimated earnings growth at the end of Q1 and 10.7 percent at the end of Q2 2013.”

According to Thomson Reuters StarMine, analysts forecast forward 5-year growth rate for the top 50 global financials at 8.8 percent, just above the 8.6 percent expectations for the S&P 500. Raman continued, “At a -1.8 percent market implied growth rate for the top 50 global financial companies, the difference between the market expected growth rates and analyst expectations, has increased to 10.6 percent, as investors continue to discount these institutions, at odds with analyst expectations. And for the first time in over a year the top 50 global banks actually have a negative share price change for the past 90 days, possibly as the market adjusts to the lower growth expectations for the sector”.

Aggregate changes to analyst recommendations for the top 50 global financial institutions over the second quarter reveal roughly equal numbers of analyst upgrades/downgrades as a group. Although the Americas institutions saw more upgrades, in Asia downgrades outnumbered upgrades by nearly two to one. Institutions in Europe saw marginally more upgrades than downgrades.


Counterparties: Credit Spreads as an Indicator of Trust

Credit default spreads (CDS) continued to tighten, as confidence amongst the top global financial institutions in pricing the relative risk of doing business with each other continued to grow. CDS for institutions in the Americas ended the second quarter with the tightest spreads (around 81.5 basis points), and Asia the widest (around 97.6). With the average spread for the top 50 global financials at about 86 basis points, CDS continue to be far below 2011’s high of nearly 350.

Regulation as a Barometer of Trust

The average daily number of regulatory alerts tracked by Thomson Reuters Accelus was 143, above 100 for the fourth consecutive quarter. A total of 17,800 alerts have been recorded as of the end of second quarter, well on track to exceed 2013’s total by year-end.

Tracking Controversy and Governance as Factors in Rebuilding Trust

Thomson Reuters ASSET4 environmental, social and governance data shows that there has been a reduction in the number of controversy events reported, with an average 19.8 percent of the top 50 global financials subject to a controversy in the second quarter, down from 22.4 percent in the previous quarter. The Financial sector as a whole also experienced a decline in the number of controversies reported, down to an average of 3.20 percent from the previous quarter’s 3.06 percent, although more than half of the top 50 global financials report some business ethics event.

Thomson Reuters TRust Index harnesses proprietary data analytics and news 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 three-minute video, featuring Chris Perry, managing director, Risk at Thomson Reuters, 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 second quarter 2013, third quarter 2013,fourth quarter 2013 and first quarter 2014 for previous results.

Thomson Reuters Data Sources: Thomson Reuters ASSET4, Thomson Reuters Accelus, Thomson Reuters Business Classification, Thomson Reuters Datastream, Thomson Reuters I/B/E/S, Thomson Reuters MarketPsych Indices, Thomson Reuters News Analytics, 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 organisation. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges. For more information, go to http://thomsonreuters.com.


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news