SIVB - SVB Financial stock tanks after market volatility pressures year NII growth outlook

SVB Financial ( NASDAQ: SIVB ) stock dropped 12.1% in Thursday after-hours trading after its mixed Q3 earnings reflected market volatility impacting liquidity flows to private firms, as rising interest rates and recession risks put investors at a standstill.

As such, the company has guided for lower 2022 growth in net interest income, targeting low forties growth from a year before vs. mid-forties growth in the prior outlook.

"The challenging environment is pressuring balance sheet and NII growth, and we expect these conditions to persist for the foreseeable future until public markets stabilize," said CEO and President Greg Becker.

Q3 EPS of $7.21, meanwhile, topped the $7.10 consensus and increased from $5.60 in Q2 and $6.24 in the year-ago quarter.

Net interest income (on a taxable equivalent basis) rose to $1.21B at September 30 from $1.18B at June 30 and $859M at Sept. 30, 2021. Net interest margin came in at 2.28% vs. 2.24% in Q2 and 1.95% in Q3 2021.

Noninterest income was $359M, down slightly from $362M in the prior quarter and $672M in Q3 of last year.

Provision for credit losses of $72M compared with $196M in Q2 and $21M a year ago.

Tangible book value of $192.54 per share declined from $199.27 in Q2 and $200.01 in Q3 2021.

Average loans stood at $71.1B vs. $69.3B in Q2; average total deposits of $185.4B vs. $192.1B in Q2.

"Despite increased M&A revenues in the past year (driven by investments in expanding our investment banking capabilities), SVB Securities revenue was at its lowest level in eight quarters, due to declines in equity capital markets and M&A activity in the quarter," Becker wrote in a shareholder letter .

Earlier, SVB Financial GAAP EPS of $7.21 beats by $0.11, revenue of $1.56B misses by $80M .

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