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NII, Loans, Fee Income to Aid Truist Financial (TFC) Q2 Earnings
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Truist Financial (TFC - Free Report) is scheduled to report second-quarter 2022 results on Jul 19, before market open. Per the Fed’s latest data, commercial and industrial loan balances (accounting for roughly 50% of the company’s total loans and leases held for investment) have witnessed a robust uptick, with an improvement in overall lending activities.
The Zacks Consensus Estimate for average earning assets for the to-be-reported quarter is pegged at $471.8 billion, indicating a marginal rise from the prior quarter’s reported figure.
With the Federal Reserve increasing the interest rates by 125 basis points (bps) during the second quarter, the company’s net interest margin (NIM) and net interest income (NII) are expected to have been favorably impacted. Also, the rise in loan demand is expected to have offered support.
Management projects core NIM to increase 7-10 bps driven by the benefits from higher interest rates. The GAAP NIM is expected to increase 3-4 bps as purchase accounting accretion is slowing, given a lower prepayment environment resulting from higher rates.
The consensus estimate for NII of $3.34 billion implies a 4.9% rise on a sequential basis.
Other Factors to Watch for
Non-interest Income: Unlike the pandemic days, deposit balance is not expected to have grown much during the second quarter. This is likely to have had an adverse impact on revenues from service charges on deposits. The Zacks Consensus Estimate of $251 million for the same implies a slight decline on a sequential basis.
Rising mortgage rates and inflation weighed on mortgage originations and refinancing activities during the quarter, hurting TFC’s mortgage banking income. Thus, the consensus estimate for the same of $85 million suggests a 4.5% fall sequentially.
Also, the consensus estimate for income from bank-owned life insurance is $50 million, suggesting a 2% fall from the previous quarter’s reported number.
With an increased focus on its insurance business, Truist Financial acquired Kensington Vanguard National Land Services and the insurance distribution platform Constellation Affiliated Partners. The consensus estimate for insurance commissions of $777 million reflects a 6.9% sequential improvement.
A rise in loan demand is expected to have offered support to the company’s lending-related fees. The Zacks Consensus Estimate for the same of $89 million indicates a 4.7% rise from the prior quarter.
While rising inflation hurt consumer sentiments, decent economic growth and pent-up demand are expected to have driven consumers toward using cards. Thus, this likely had a positive impact on TFC’s card business. The Zacks Consensus Estimate for card and payment-related fees of $227 million suggests 7.1% growth sequentially.
Further, the consensus estimate of investment banking and brokerage fees and commissions of $277 million indicates a 6.2% increase from the prior quarter, given the volatility in the equity markets amid a slowdown in M&As.
The Zacks Consensus Estimate for total non-interest income of $2.26 billion implies a 5.6% increase on a sequential basis.
Expenses: Truist Financial has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and merger integration. A similar trend is expected to have continued in the second quarter as well.
Asset Quality: In the last four quarters, Truist Financial had been releasing reserves that it built to cover losses from the effects of the coronavirus pandemic. This hugely supported the company’s earnings. Yet, with the rise in loan demand and expectations of economic slowdown due to geopolitical and macroeconomic concerns, the company might have built reserves in the second quarter.
The Zacks Consensus Estimate for non-performing assets is pegged at $1.07 billion, indicating a fall of 2.5% from the last reported quarter. The consensus estimate for total non-accrual loans and leases of $1.05 billion suggests a 2.7% decrease.
Earnings Whispers
According to our quantitative model, the chances of Truist Financial beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Truist Financial is +0.62%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Truist Financial Corporation Price and EPS Surprise
The Zacks Consensus Estimate for second-quarter earnings of $1.17 per share has moved almost 1% lower over the past seven days. The figure indicates a fall of 24.5% from the year-ago reported number.
The consensus estimate for sales is pegged at $5.64 billion, indicating a marginal rise of 0.2%. Management expects adjusted pre-provision net revenues to increase in the high-single-digit sequentially.
Other Banks Worth Considering
Here are a couple of other bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
CFG’s earnings estimates for the to-be-reported quarter have remained unchanged over the 30 days.
M&T Bank (MTB - Free Report) is slated to release second-quarter 2022 numbers on Jul 20. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +1.53%.
MTB’s quarterly earnings estimates have moved 4.3% lower over the past month.
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NII, Loans, Fee Income to Aid Truist Financial (TFC) Q2 Earnings
Truist Financial (TFC - Free Report) is scheduled to report second-quarter 2022 results on Jul 19, before market open. Per the Fed’s latest data, commercial and industrial loan balances (accounting for roughly 50% of the company’s total loans and leases held for investment) have witnessed a robust uptick, with an improvement in overall lending activities.
The Zacks Consensus Estimate for average earning assets for the to-be-reported quarter is pegged at $471.8 billion, indicating a marginal rise from the prior quarter’s reported figure.
With the Federal Reserve increasing the interest rates by 125 basis points (bps) during the second quarter, the company’s net interest margin (NIM) and net interest income (NII) are expected to have been favorably impacted. Also, the rise in loan demand is expected to have offered support.
Management projects core NIM to increase 7-10 bps driven by the benefits from higher interest rates. The GAAP NIM is expected to increase 3-4 bps as purchase accounting accretion is slowing, given a lower prepayment environment resulting from higher rates.
The consensus estimate for NII of $3.34 billion implies a 4.9% rise on a sequential basis.
Other Factors to Watch for
Non-interest Income: Unlike the pandemic days, deposit balance is not expected to have grown much during the second quarter. This is likely to have had an adverse impact on revenues from service charges on deposits. The Zacks Consensus Estimate of $251 million for the same implies a slight decline on a sequential basis.
Rising mortgage rates and inflation weighed on mortgage originations and refinancing activities during the quarter, hurting TFC’s mortgage banking income. Thus, the consensus estimate for the same of $85 million suggests a 4.5% fall sequentially.
Also, the consensus estimate for income from bank-owned life insurance is $50 million, suggesting a 2% fall from the previous quarter’s reported number.
With an increased focus on its insurance business, Truist Financial acquired Kensington Vanguard National Land Services and the insurance distribution platform Constellation Affiliated Partners. The consensus estimate for insurance commissions of $777 million reflects a 6.9% sequential improvement.
A rise in loan demand is expected to have offered support to the company’s lending-related fees. The Zacks Consensus Estimate for the same of $89 million indicates a 4.7% rise from the prior quarter.
While rising inflation hurt consumer sentiments, decent economic growth and pent-up demand are expected to have driven consumers toward using cards. Thus, this likely had a positive impact on TFC’s card business. The Zacks Consensus Estimate for card and payment-related fees of $227 million suggests 7.1% growth sequentially.
Further, the consensus estimate of investment banking and brokerage fees and commissions of $277 million indicates a 6.2% increase from the prior quarter, given the volatility in the equity markets amid a slowdown in M&As.
The Zacks Consensus Estimate for total non-interest income of $2.26 billion implies a 5.6% increase on a sequential basis.
Expenses: Truist Financial has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and merger integration. A similar trend is expected to have continued in the second quarter as well.
Asset Quality: In the last four quarters, Truist Financial had been releasing reserves that it built to cover losses from the effects of the coronavirus pandemic. This hugely supported the company’s earnings. Yet, with the rise in loan demand and expectations of economic slowdown due to geopolitical and macroeconomic concerns, the company might have built reserves in the second quarter.
The Zacks Consensus Estimate for non-performing assets is pegged at $1.07 billion, indicating a fall of 2.5% from the last reported quarter. The consensus estimate for total non-accrual loans and leases of $1.05 billion suggests a 2.7% decrease.
Earnings Whispers
According to our quantitative model, the chances of Truist Financial beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Truist Financial is +0.62%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Truist Financial Corporation Price and EPS Surprise
Truist Financial Corporation price-eps-surprise | Truist Financial Corporation Quote
The Zacks Consensus Estimate for second-quarter earnings of $1.17 per share has moved almost 1% lower over the past seven days. The figure indicates a fall of 24.5% from the year-ago reported number.
The consensus estimate for sales is pegged at $5.64 billion, indicating a marginal rise of 0.2%. Management expects adjusted pre-provision net revenues to increase in the high-single-digit sequentially.
Other Banks Worth Considering
Here are a couple of other bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Citizens Financial Group (CFG - Free Report) is scheduled to release second-quarter 2022 earnings on Jul 19. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +5.22%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CFG’s earnings estimates for the to-be-reported quarter have remained unchanged over the 30 days.
M&T Bank (MTB - Free Report) is slated to release second-quarter 2022 numbers on Jul 20. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +1.53%.
MTB’s quarterly earnings estimates have moved 4.3% lower over the past month.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.