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Muted Loan Growth to Mar Truist Financial (TFC) Q3 Earnings

Muted Loan Growth to Mar Truist Financial (TFC) Q3 Earnings

Truist Financial Corporation TFC is slated to announce third-quarter 2020 results on Oct 15, before market open. Per the Fed’s latest data, commercial and industrial loan (C&I) balances (accounting for almost 50% of the company’s total loans and leases held for investment) declined in the third quarter as overall lending activities remained muted due to continued fears related to the coronavirus outbreak.

Moreover, the Zacks Consensus Estimate for average earning assets for the to-be-reported quarter is pegged at $435.2 billion, indicating a 2.6% decline from the prior quarter’s reported figure.

Thus, because of muted growth in loans along with near-zero interest rates, Truist Financial’s net interest margin (NIM) and net interest income (NII) are expected to have been hurt in the third quarter. Management anticipates NIM to be flat sequentially.

The consensus estimate for NII for the to-be-reported quarter of $3.31 billion indicates a 4.1% decline sequentially.

Other Key Estimates for Q3

Non-interest Income: The consensus estimate for insurance commission is pegged at $513 million, indicating a fall of 11.7% sequentially. The consensus mark for income from bank-owned life insurance is $45 million, suggesting no change from the previous quarter’s reported number.

The Zacks Consensus Estimate for service charges on deposits of $225 million suggests a rise of 11.4% from the prior quarter. However, the consensus estimate for operating lease income of $78 million indicates a decline of 6% from the previous quarter’s reported figure.

The consensus estimate for total non-interest income of $2.03 billion points to a 16.3% decline on a sequential basis.

Expenses: While the company has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and merger integration, management anticipates core non-interest expenses (excluding merger costs and amortization) for the to-be-reported quarter to be down

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