Loan Growth, Relatively High Rates to Support Truist's Q3 Earnings

Truist Financial TFC is scheduled to announce third-quarter 2025 results on Oct. 17 before the opening bell. The overall lending scenario was impressive in the quarter.

Per the Fed’s latest data, the demand for commercial and industrial (C&I) loans (accounting for almost 50% of TFC’s total loans and leases held for investment) was robust in the to-be-reported quarter. The demand for consumer loans (almost 40% of total loans) was decent.

The Zacks Consensus Estimate for TFC’s average earning assets for the third quarter is pegged at $485 billion, which indicates a 4% rise from the prior-year quarter’s actual. We project the metric to be $483.3 billion.

In the third quarter, the Federal Reserve lowered interest rates by 25 basis points to 4.00-4.25%. However, since this occurred toward the end of the quarter, it is less likely to have hurt TFC’s net interest income (NII). With rates remaining relatively unchanged for most of the quarter, funding/deposit costs are expected to have been stable. Thus, amid gradually stabilizing funding costs, TFC’s NII is expected to have improved, supported by relatively higher rates and loan growth.

The consensus estimate for NII is pegged at $3.67 billion, which implies a 1.9% year-over-year rise. Our estimate for the metric is also $3.67 billion.

Management anticipates third-quarter NII to rise 2% sequentially, primarily driven by an additional day relative to the prior quarter, loan growth and the benefits of fixed asset repricing.

TFC’s Other Key Factors & Estimates for Q3

Non-Interest Income: The Zacks Consensus Estimate for service charges on deposits of $232 million suggests a 5% rise from the prior-year quarter’s reported figure. Our estimate for the metric is pegged at $229.3 million.

The Zacks Consensus Estimate for card and payment-related fees of $233 million suggests a year-over-year rise of 5%. Our estimate for the metric is $231.9 million.

Mortgage rates declined substantially in the third quarter, from the levels observed at the beginning of the year. The quarter saw rates fluctuate, but they remained within a range. Hence, refinancing activities and origination volume were decent. Thus, Truist’s mortgage banking income is expected to have risen to some extent. The consensus estimate for the metric of $112 million indicates a 14.3% jump from the prior-year quarter. Our estimate for mortgage banking income is $107 million.

Higher client activity and volatility in the capital markets in the to-be-reported quarter are expected to have supported TFC’s corresponding fee income. The consensus estimate for the company’s investment banking (IB) and trading income of $263 million indicates a year-over-year fall of 20.8%.

The robust lending scenario is likely to have supported TFC’s lending-related fees. The Zacks Consensus Estimate for the same of $99 million indicates a rise of 12.5%. We anticipate the metric to be $96.1 million.

The Zacks Consensus Estimate for third-quarter wealth management income of $357 million suggests a rise of 2% from the prior-year quarter’s actual. Our estimate for the metric is $355.4 million.

Overall, the Zacks Consensus Estimate for total non-interest income is pegged at $1.48 billion, which indicates a marginal decline from the prior-year quarter’s reported figure. We project non-interest income of $1.47 billion for the to-be-reported quarter.

Management expects non-interest income to increase 5% sequentially, primarily driven by higher IB and trading income, partly offset by lower other income.

Expenses: Truist has been witnessing a continued rise in overall non-interest expenses over the past several quarters because of investments in technology, inflationary pressure and expansion efforts. A similar trend is expected to have continued in the third quarter.

Our estimate for total adjusted non-interest expenses is pegged at $2.91 billion, implying an increase of 2.8% from the prior-year quarter’s actual.

Management expects adjusted expenses, including core deposit intangible (CDI) and amortization expenses, to increase 1% sequentially.

Asset Quality: Truist is less likely to have set aside a massive amount of money for potential delinquent loans, given the expectations of two more interest rate cuts this year amid the impact of Trump’s tariffs on inflation and the labor market.

Our estimate for provision for credit losses is pegged at $516.9 million, implying a 15.4% year-over-year rise.

The Zacks Consensus Estimate for total non-accrual loans and leases of $1.49 billion suggests a 1% year-over-year increase. We project total non-accrual loans and leases to be $1.37 billion.

What the Zacks Model Unveils for TFC

According to our quantitative model, the chances of Truist beating the Zacks Consensus Estimate for earnings 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 are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Truist is +0.12%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Truist’s Q3 Earnings & Sales Expectations

The Zacks Consensus Estimate for TFC’s earnings of 99 cents per share has been revised 1% higher over the past seven days. The estimate indicates a rise of 2.1% from the year-ago reported number.

Truist Financial Corporation Price and EPS Surprise

 

Truist Financial Corporation price-eps-surprise | Truist Financial Corporation Quote

The consensus estimate for sales is pegged at $5.15 billion, which implies a 1.3% year-over-year rise.

Management expects third-quarter 2025 adjusted revenues to rise 2.5-3.5% sequentially.

TFC’s Peers Worth Considering

Here are a couple of other bank stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time:

State Street STT is scheduled to announce third-quarter 2025 results on Oct. 17. The company sports a Zacks Rank #1 (Strong Buy) and has an Earnings ESP of +0.13% at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quarterly earnings estimates for State Street have been revised marginally upward to $2.62 over the past week.

The Earnings ESP for Prosperity Bancshares PB is +0.52% and it carries a Zacks Rank #3. The company is slated to report third-quarter 2025 results on Oct. 29. 

Over the past seven days, the Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has been unchanged at $1.45.

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This article originally published on Zacks Investment Research (zacks.com).

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