We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Loan Growth Boosts Truist's NII in 1H25: Is the Upside Sustainable?
Read MoreHide Full Article
Key Takeaways
Truist's loans rose 2% YoY to $312.6B, driving higher average earning assets in 1H25.
NII grew 3% to $7.09B, as lower funding costs offset a 42-bps loan yield decline.
Management sees NII rising almost 3% in 2025, aided by $27B in loan repricing and modest loan growth.
Truist Financial (TFC - Free Report) , one of the largest regional banks in the United States, is witnessing steady loan growth. As of June 30, 2025, the lender had $312.6 billion in average loans and leases held for investment, a rise of 2% on a year-over-year basis.
As the average loan balance improved, it led to higher average earning assets for TFC in the first six months of 2025. Though the yield on the average total loan portfolio of 5.99% declined 42 basis points (bps) from the prior-year period following interest rate cuts in the latter part of 2024, this was more than offset by lower average cost of interest-bearing deposits (down 37 bps) and average cost of short-term borrowings (down 112 bps).
As such, Truist’s net interest income (NII) of $7.09 billion in the first half of 2025 witnessed 3% year-over-year growth. Likewise, net interest margin improved 7 bps to 3.02%.
Management is optimistic about the NII growth trajectory in 2025. The company expects NII to increase approximately 3% this year on the assumptions of low single-digit average loan growth and reductions in the Fed funds rate later in the year. Also, Truist plans to reprice roughly $27 billion of fixed-rate loans and investment securities in the second half of 2025, with new fixed-rate loans likely to have a run-on rate around 7% compared with a current run-off rate of nearly 6.4%.
Hence, Truist expects modest loan growth, favorable loan repricing and strategic balance sheet management to offset Fed rate cuts, with higher loan yields and extra revenue days boosting NII in 2025. We expect NII to grow 2.8%, 3.1% and 4.5% in 2025, 2026 and 2027, respectively. Our estimates for total loans indicate a compound annual growth rate (CAGR) of 3.8% 2027. Further, in 2025, 2026 and 2027, we project NIM to be 3.05%, 3.14% and 3.25%, respectively.
How are Truist’s Peers Faring in Terms of Loan Growth & NII?
PNC Financial (PNC - Free Report) benefits from a decent lending scenario. Total loans have witnessed a five-year (2019-2024) CAGR of 5.6%, with momentum continuing in the first half of 2025. The expectation of interest rate cuts in 2025 is likely to influence loan demand positively in the forthcoming period.
Driven by decent loan growth, PNC Financial’s NII witnessed a five-year (ended 2024) CAGR of 6.3%, with a rising trend continuing in the first six months of 2025. Loan repricing, modest loan growth and stabilizing funding costs are expected to boost PNC Financial’s NII in 2025, with management projecting a 7% rise in the same this year.
U.S. Bancorp (USB - Free Report) has experienced strong growth in total loans during the past few years as it continued to expand and deepen relationships with current customers and acquire new customers and market share. The company’s total loans recorded a five-year (2019-2024) CAGR of 5.1%, with the trend continuing in the first six months of 2025. Going forward, the strengthening of loan pipelines in the commercial and credit card space is likely to drive loan growth.
On the back of loan growth, U.S. Bancorp’s NII witnessed a five-year CAGR of 4.4% through 2019-2024, with a rising trend continuing in the first half of 2025. Investment portfolio repositioning, stabilizing funding costs and less deposit migration will drive U.S. Bancorp’s NII expansion in the quarters ahead.
Truist’s Price Performance & Zacks Rank
Shares of Truist have risen 1.8% this year, underperforming the industry’s growth of 6.7%.
Image: Bigstock
Loan Growth Boosts Truist's NII in 1H25: Is the Upside Sustainable?
Key Takeaways
Truist Financial (TFC - Free Report) , one of the largest regional banks in the United States, is witnessing steady loan growth. As of June 30, 2025, the lender had $312.6 billion in average loans and leases held for investment, a rise of 2% on a year-over-year basis.
As the average loan balance improved, it led to higher average earning assets for TFC in the first six months of 2025. Though the yield on the average total loan portfolio of 5.99% declined 42 basis points (bps) from the prior-year period following interest rate cuts in the latter part of 2024, this was more than offset by lower average cost of interest-bearing deposits (down 37 bps) and average cost of short-term borrowings (down 112 bps).
As such, Truist’s net interest income (NII) of $7.09 billion in the first half of 2025 witnessed 3% year-over-year growth. Likewise, net interest margin improved 7 bps to 3.02%.
Management is optimistic about the NII growth trajectory in 2025. The company expects NII to increase approximately 3% this year on the assumptions of low single-digit average loan growth and reductions in the Fed funds rate later in the year. Also, Truist plans to reprice roughly $27 billion of fixed-rate loans and investment securities in the second half of 2025, with new fixed-rate loans likely to have a run-on rate around 7% compared with a current run-off rate of nearly 6.4%.
Hence, Truist expects modest loan growth, favorable loan repricing and strategic balance sheet management to offset Fed rate cuts, with higher loan yields and extra revenue days boosting NII in 2025. We expect NII to grow 2.8%, 3.1% and 4.5% in 2025, 2026 and 2027, respectively. Our estimates for total loans indicate a compound annual growth rate (CAGR) of 3.8% 2027. Further, in 2025, 2026 and 2027, we project NIM to be 3.05%, 3.14% and 3.25%, respectively.
How are Truist’s Peers Faring in Terms of Loan Growth & NII?
PNC Financial (PNC - Free Report) benefits from a decent lending scenario. Total loans have witnessed a five-year (2019-2024) CAGR of 5.6%, with momentum continuing in the first half of 2025. The expectation of interest rate cuts in 2025 is likely to influence loan demand positively in the forthcoming period.
Driven by decent loan growth, PNC Financial’s NII witnessed a five-year (ended 2024) CAGR of 6.3%, with a rising trend continuing in the first six months of 2025. Loan repricing, modest loan growth and stabilizing funding costs are expected to boost PNC Financial’s NII in 2025, with management projecting a 7% rise in the same this year.
U.S. Bancorp (USB - Free Report) has experienced strong growth in total loans during the past few years as it continued to expand and deepen relationships with current customers and acquire new customers and market share. The company’s total loans recorded a five-year (2019-2024) CAGR of 5.1%, with the trend continuing in the first six months of 2025. Going forward, the strengthening of loan pipelines in the commercial and credit card space is likely to drive loan growth.
On the back of loan growth, U.S. Bancorp’s NII witnessed a five-year CAGR of 4.4% through 2019-2024, with a rising trend continuing in the first half of 2025. Investment portfolio repositioning, stabilizing funding costs and less deposit migration will drive U.S. Bancorp’s NII expansion in the quarters ahead.
Truist’s Price Performance & Zacks Rank
Shares of Truist have risen 1.8% this year, underperforming the industry’s growth of 6.7%.
Image Source: Zacks Investment Research
TFC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.