Truist Financial's Q4 Earnings Beat as NII & Fee Income Rise, Stock Up

Shares of Truist Financial TFC rose 2.9% in the pre-market trading session on better-than-expected results. The company’s fourth-quarter 2024 adjusted earnings of 91 cents per share surpassed the Zacks Consensus Estimate of 87 cents. The figure also jumped 12.3% year over year.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Results benefited from higher net interest income (NII) and non-interest income. Further, lower provisions and higher average deposit balances acted as tailwinds. On the other hand, lower average loan balances and higher adjusted non-interest expenses were undermining factors.Results in the reported quarter excluded certain notable items. After considering those, net income available to common shareholders (GAAP basis) was $1.22 billion against a loss of $5.17 billion in the prior-year quarter. Our estimate for net income was $1.15 billion.Adjusted earnings for 2024 were $3.69 per share, which beat the Zacks Consensus Estimate by a penny. Net income available to common shareholders (GAAP basis) was $4.47 billion against a net loss of $1.45 billion in the previous year.TFC’s Revenues Rise, Expenses FallTotal quarterly revenues of $5.06 billion grew 3.6% year over year. The top line beat the Zacks Consensus Estimate of $5 billion.For 2024, revenues were $13.28 billion, down 33.7% year over year. The top line lagged the Zacks Consensus Estimate of $19.87 billion.Tax-equivalent NII increased 1.8% to $3.64 billion. The rise was driven by balance sheet repositioning undertaken in the second quarter. Our estimate for NII (FTE) was $3.61 billion.Net interest margin (NIM) grew 12 basis points (bps) to 3.07%. We had projected the metric to be 3.05%.Non-interest income was $1.47 billion, up 7.9%. The increase was driven by higher investment banking and trading income, mortgage banking income, service charges on deposits and other income. We had expected this metric to be $1.40 billion.Non-interest expenses were $3.04 billion, down 68.2%. Excluding certain non-recurring items, adjusted non-interest expenses rose 7.6% to $3.03 billion. The decline was mainly attributable to higher personnel expenses and professional fees and outside processing expense. Our estimate for adjusted non-interest expenses was $2.91 billion.The adjusted efficiency ratio was 57.7%, up from 55% in the prior-year quarter. A rise in the efficiency ratio indicates a decline in profitability.As of Dec. 31, 2024, total average deposits were $390 billion, up 1.5% on a sequential basis. Average loans and leases held for investment of $303.1 billion declined marginally.TFC’s Credit Quality: Mixed BagNet charge-offs were 0.59% of average loans and leases, up 2 bps. Also, the allowance for loan and lease losses was 1.59% of total loans and leases held for investment, which increased 5 bps.Provision for credit losses was $471 million in the fourth quarter, down 17.7% from the prior-year quarter. Our estimate for provisions was $455.3 million.As of Dec. 31, 2024, total non-performing assets (NPAs) were $1.48 billion, down marginally. We had expected NPAs to be $1.43 billion.TFC’s Profitability & Capital Ratios ImproveAt the end of the reported quarter, the return on average common equity was 8.4% compared with a negative return on average common equity of 36.6% in the fourth quarter of 2023.As of Dec. 31, 2024, the Tier 1 risk-based capital ratio was 12.9% compared with 11.6% in the prior-year quarter. The common equity Tier 1 ratio was 11.5% as of Dec. 31, 2024, up from 10.1% as of Dec. 31, 2023.Update on TFC’s Share RepurchasesDuring the reported quarter, Truist Financial repurchased shares worth $500 million.Our Take on Truist FinancialA decent loan demand, business restructuring initiatives and TFC’s efforts to bolster fee income are expected to continue supporting its top line. However, elevated expenses and weak asset quality given tough operating environment are major headwinds.Truist Financial Corporation Price, Consensus and EPS Surprise Truist Financial Corporation price-consensus-eps-surprise-chart | Truist Financial Corporation QuoteTruist Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of TFC’s Larger PeersWells Fargo & Company WFC reported its fourth-quarter 2024 adjusted earnings per share of $1.42, which surpassed the Zacks Consensus Estimate of $1.34. In the prior-year quarter, the company reported earnings per share of $1.29.WFC’s results benefited from higher non-interest income. An improvement in capital ratios, a decline in provisions and non-interest expenses were other positives. However, the decrease in NII was the undermining factor.Solid IB and trading performance drove JPMorgan’s JPM fourth-quarter 2024 earnings to $4.81 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.03.Robust capital markets performance, higher mortgage banking performance, lower provisions and non-interest expenses supported JPM’s quarterly performance. On the other hand, lower NII acted as a headwind.Just Released: Zacks Top 10 Stocks for 2025Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. 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