M&T Bank Expects Higher Q2 NII and NIM on Modest Loan Growth

M&T Bank Corporation MTB has come up with a positive business update for the second quarter of 2025. The bank expects sequential improvement in net interest income (NII) and net interest margin (NIM), building on favorable underlying trends from the first quarter. In the first quarter, NII stood at $1.70 billion, down 1.7% from $1.73 billion in the fourth quarter due to seasonal impacts, but up 1.2% from $1.68 billion reported in the year-ago period. Similarly, NIM expanded to 3.66% from 3.52% in the first quarter of 2024.

M&T Bank attributes the anticipated uplift in NII and NIM to a modest increase in average loans, driven by continued growth in consumer portfolios, while commercial real estate (CRE) balances continue to decline. Further, MTB projects a rise in average deposits during the quarter, primarily attributable to stronger customer deposit flows. An additional business day in the second quarter is also expected to support the metrics. At the end of the first quarter, average loans totaled $134.84 billion and average deposits stood at $161.22 billion.

Additionally, M&T Bank expects continued strength and sequential growth in fee income for the second quarter of 2025. This momentum is expected to be broad-based across trust income, service charges, residential and commercial mortgage banking, and other noninterest income categories. The second quarter will also reflect the full-quarter impact of residential mortgage sub-servicing activity that began in February. In the first quarter of 2025, M&T Bank reported a total fee income of $611 million, representing a 6% year-over-year increase. Fee-based businesses contributed roughly 26% of total revenues in the first quarter of 2025, and M&T Bank remains focused on expanding its diversified fee income base going forward.

Also, for the second quarter of 2025, net charge-offs are expected to remain volatile on a quarterly basis but are projected to align with the full-year estimate of approximately 40 basis points. On the other hand, the company’s expenses in the second quarter are projected to decline sequentially, largely due to the seasonal reduction in compensation costs.

M&T Bank Reiterates Full-year 2025 Guidance

MTB expects loan balances between $135 billion and $137 billion, driven by growth in consumer, residential mortgage, and commercial & industrial lending, partially offset by declines in CRE. Further, by focusing on customer deposit growth, management projects average deposits to be in the range of $162 billion-$164 billion. Additionally, the company anticipates NII to be in the $7.05-$7.15 billion range and NIM in the mid-to-high 3.60% range. These expectations reflect management’s confidence in the bank’s stable funding profile and prudent growth strategy.

M&T Bank’s fee income is projected to be in the range of $2.5 billion-$2.6 billion, trending toward the higher end due to continued strength in trust and mortgage-related income. Further, the company expects full-year 2025 net charge-offs to be around 40 basis points of average loans, reflecting normalization in consumer credit and year-over-year improvement in commercial portfolios. MTB reaffirmed its GAAP expense outlook (including intangible amortization) of $5.4 billion to $5.5 billion for 2025, reflecting prudent cost management while continuing to invest in operational and digital improvements.

Our Take on MTB

MTB shares have gained 27% over the past year, outperforming the industry’s 22.5% increase.

Return on tangible common equity stood at 12.5% in the first quarter, and the company continues to benefit from a stable funding base and solid balance sheet metrics. The bank’s strong capital base, stable credit metrics, and top-tier margin performance continue to support its financials over the long term.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In recent days, JPMorgan Chase & Co. JPM and Comerica Incorporated CMA have also provided their guidance for the second quarter.

JPMorgan expects investment banking fees to decline in the mid-teens range year over year, citing stalled deal activity amid economic uncertainty. In contrast, markets revenues of JPMorgan are projected to rise mid-to-high single digits, supported by higher volatility and client trading.

Comerica revised its deposit outlook more cautiously, forecasting a $600 million decline in average deposits on a sequential basis due to pricing pressures. However, CMA expects average loan balances to increase by $200 million, reflecting strength in commercial lending.

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