Truist bank log in10/5/2023 Truist Financial Corporation Price, Consensus and EPS Surprise However, elevated expenses and ambiguity over geopolitical and economic risks are major headwinds. Apart from strategic buyouts, the divestiture of 20% stake in Truist Insurance Holdings in April unlocked the value of the unit as well as investors.įurther, a decent loan demand, higher rates and efforts to bolster fee income are expected to continue supporting the company’s top line. Truist Financial’s efforts to capitalize on the insurance business bode well. In the reported quarter, Truist Financial did not repurchase any shares. The common equity Tier 1 ratio was 9.6% as of Jun 30, 2023, up from 9.2% as of Jun 30, 2022. Return on average common equity was 8.6%, down from 10.3% in the second quarter of 2022.Īs of Jun 30, 2023, the Tier 1 risk-based capital ratio was 11.1% compared with 10.8% recorded in the prior-year quarter. Profitability Ratios Weaken, Capital Ratios ImproveĪt the end of the reported quarter, the return on average assets was 0.95%, down from 1.14% in the prior-year quarter. Also, the allowance for loan and lease losses was 1.43% of total loans and leases held for investment, which increased 5 bps. Net charge-offs were 0.54% of average loans and leases, up 32 bps from the year-ago quarter. Our estimate for provisions was $545 million. Provision for credit losses was $538 million, surging substantially from $171 million in the prior-year quarter. Credit Quality WorsensĪs of Jun 30, 2023, total non-performing assets (NPAs) were $1.58 billion, up 35% year over year. This was mainly attributable to a rise in mortgage warehouse lending and core commercial and industrial portfolio, which was offset by the sale of the student loan portfolio and loan growth moderation across the industry. The fall was largely due to the impact of client tax payments and rotation of deposits toward high interest paying alternatives.Īverage total loans and leases of $326.4 billion remained relatively stable. A rise in the efficiency ratio indicates a deterioration in profitability.Īs of Jun 30, 2023, total average deposits were $399.8 billion, down 2.1% sequentially. The adjusted efficiency ratio was 59.6%, up from 57% in the prior-year quarter. Our estimate for the same was $3.7 billion. This was due to an increase in personnel expenses, other expenses and regulatory costs. Non-interest expenses were $3.75 billion, up 4.7%. Our estimate for non-interest income was $2.2 billion. This was mainly driven by a rise in insurance income and other income, partially offset by a fall in investment banking and trading income. Non-interest income grew 2% to $2.29 billion. We had expected NIM to be 3.03% but substantially higher funding costs led the company to post lower numbers. Net interest margin (NIM) expanded 2 basis points (bps) to 2.91%. Our estimate for NII (FTE) was $3.79 billion. The rise was driven by strong loan growth and higher market interest rates, partially offset by lower purchase accounting accretion. Tax-equivalent NII increased 7.1% to $3.68 billion. The top line missed the Zacks Consensus Estimate of $5.94 billion. Total quarterly revenues were $5.92 billion, up 4.5% year over year. Our estimate for the same was $1.3 billion. Net income available to common shareholders was $1.23 billion, down from $1.45 billion in the prior-year quarter. On the other hand, an increase in net income interest (NII) and non-interest income offered support. Further, the company witnessed a decline in deposits during the quarter. Results were adversely impacted by higher provisions and an increase in expenses. The fall in average deposit balance and worsening credit quality also weighed on investor sentiments. Shares of TFC have tanked 2.9% in the pre-market trading on lower-than-expected quarterly results. This excluded merger-related and restructuring charges of 3 cents per share. Truist Financial’s ( TFC Quick Quote TFC - Free Report) second-quarter 2023 adjusted earnings of 95 cents per share lagged the Zacks Consensus Estimate of 98 cents.
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