Truist Financial Corporation (TFC) reported its first-quarter financial results, highlighting an adjusted EPS of 90 cents, which surpassed the consensus estimate of 80 cents. However, this figure represents a decline compared to the $1.05 EPS recorded in the same period last year.
The company’s revenue witnessed a dip from $5.34 billion a year ago to $4.87 billion in the first quarter, falling short of the consensus forecast of $5.7 billion. This decline was primarily driven by a 4.2% decrease in net interest income due to lower earning assets and higher funding costs, resulting in a seven basis point reduction in net interest margin.
Noninterest income, on the other hand, experienced a modest increase of 6.1% due to higher investment banking and trading income, partially offset by a decline in lending-related fees. The average loans and leases held for investment (HFI) decreased by 1.3%, attributed to reduced activity in consumer, commercial, and industrial portfolios.
Average commercial loans saw a $1.6 billion or 0.9% decrease, largely driven by a decline in C&I. Consumer loans also decreased by $2.4 billion or 2%, primarily due to a $1 billion reduction in indirect auto loans, a $600 million decline in other consumer loans, and a $600 million decrease in mortgage loans.
Average deposits declined by 1.6%, predominantly due to reductions in non-interest bearing and money market and savings deposits. Deposit costs increased primarily because of the ongoing shift from lower-cost deposit accounts.
Truist’s provision for credit losses reached $500 million in the first quarter, comparable to the $502 million recorded a year ago. “We are satisfied with the progress and momentum of our business in the first quarter,” stated Bill Rogers, Truist’s CEO. “Our expense discipline was evident and reflects important decisions we made last year.”
Rogers further commented, “Our strengthening capital position enables us to better navigate any economic environment and, importantly, allows us to adopt a more offensive position with our core banking franchise.”
Looking ahead, Truist anticipates a sequential revenue decline of around 2% in the second quarter. For fiscal 2024, the banking firm forecasts a revenue decline of approximately 4%-5% year-over-year. In the premarket session on Monday, TFC shares were down 2.16% to $36.01 at the last check.
