Truist Financial's Q1 Earnings Beat Estimates on Higher NII, Stock Up

Shares of Truist Financial TFC rose 1.6% in the pre-market trading session on better-than-expected earnings. The company’s first-quarter 2025 adjusted earnings of 87 cents per share beat the Zacks Consensus Estimate by a penny. However, the figure declined 3.3% year over year.

Results benefited from higher net interest income (NII). Further, lower provisions and higher average deposit and loan balances acted as tailwinds. On the other hand, lower non-interest income and higher adjusted non-interest expenses were undermining factors.

Results in the reported quarter excluded pre-tax restructuring charges of roughly $38 million. After considering those, net income available to common shareholders (GAAP basis) was $1.16 billion compared with $1.09 billion in the prior-year quarter. Our estimate for net income was $1.13 billion.

TFC’s Revenues Rise, Expenses Fall

Total quarterly revenues of $4.90 billion grew 1.7% year over year. The top line, however, missed the Zacks Consensus Estimate of $4.92 billion.

Tax-equivalent NII increased 3.8% to $3.56 billion. The rise was driven by balance sheet repositioning undertaken in the second quarter of 2024. Our estimate for NII (FTE) was $3.57 billion.

Net interest margin (NIM) grew 13 basis points (bps) to 3.01%. We had projected the metric to be 3.06%.

Non-interest income was $1.40 billion, down 3.7%. The fall was due to a decline in almost all the components except service charges on deposits, mortgage banking income and other income. We had expected this metric to be $1.43 billion.

Non-interest expenses were $2.91 billion, down 1.6%. The decline was mainly attributable to lower personnel expenses and regulatory costs, equipment expenses, and restructuring charges. Excluding certain non-recurring items, adjusted non-interest expenses rose 1.5% to $2.87 billion. Our estimate for adjusted non-interest expenses was $2.86 billion.

The adjusted efficiency ratio was 56.4%, up from 56.2% in the prior-year quarter. A rise in the efficiency ratio indicates a decline in profitability.

As of March 31, 2025, total average deposits were $392.2 billion, up marginally on a sequential basis. Average loans and leases held for investment of $306.4 billion rose 1.1%.

TFC’s Credit Quality: Mixed Bag

Net charge-offs were 0.60% of average loans and leases, down 4 bps. Provision for credit losses was $458 million in the first quarter, down 8.4% from the prior-year quarter. Our estimate for provisions was $470.1 million.

On the other hand, the allowance for loan and lease losses was 1.58% of total loans and leases held for investment, which increased 2 bps.

As of March 31, 2025, total non-performing assets (NPAs) were $1.62 billion, up 9.6%. We had expected NPAs to be $1.41 billion.

TFC’s Profitability Ratios Worsen, Capital Ratios Improve

At the end of the reported quarter, the return on average common equity was 8.1% compared with 8.4% in the first quarter of 2024.

As of March 31, 2025, the Tier 1 risk-based capital ratio was 12.7% compared with 11.7% in the prior-year quarter. The common equity Tier 1 ratio was 11.3% as of March 31, 2025, up from 10.1% as of March 31, 2024.

Update on TFC’s Share Repurchases

During the reported quarter, Truist Financial repurchased shares worth $500 million.

Our Take on Truist Financial

A decent loan demand, business restructuring initiatives and TFC’s efforts to bolster fee income are expected to continue supporting its top line. Also, relatively higher rates and a solid balance sheet position are other positives. However, elevated expenses and weak asset quality, given a 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 Quote

Truist 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 Peers

Wells Fargo & Company WFC reported first-quarter 2025 adjusted earnings per share of $1.27, which surpassed the Zacks Consensus Estimate by 3.3%. In the prior-year quarter, the company reported earnings per share of $1.26. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

WFC’s results benefited from a slight improvement in non-interest income. Declines in provisions and non-interest expenses were other positives. However, the decrease in NII was an undermining factor.

Solid trading performance, impressive growth in credit card and wholesale loans and decent investment banking performance drove JPMorgan’s JPM first-quarter 2025 earnings of $5.07 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.62.

Robust capital markets performance, higher mortgage banking performance and higher NII supported JPM’s quarterly performance. On the other hand, higher provisions and non-interest expenses acted as a headwind.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research