Truist Financial Corporation
CEO : Mr. William Henry Rogers Jr.
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q3 | -1.7% YoY | -111.9% | 25.0% | 2024-10-17 |
Bill Rogers says,
Financial Performance and Strategic Growth
- Reported net income available to common shareholders was $1.3 billion or $0.99 per share.
- Adjusted earnings per share (EPS) was $0.97, excluding small discrete items.
- Adjusted revenue grew by 2.4% on a linked-quarter basis.
- Expenses projected to decline in 2024 compared to 2023, an improvement from the original commitment.
- The company maintains a stable CET1 capital ratio, allowing for balance sheet growth and significant capital returns to shareholders.
Community Assistance and Impact of Hurricanes
- Truist deployed humanitarian aid in response to two devastating hurricanes in the Southeast.
- Efforts included mobile services like showers, laundering facilities, and mobile branches/ATMs.
- A $25 million loan loss provision was recorded due to Hurricane Helene.
- Significant role expected in community recovery and rebuilding over the coming years.
Capital Return to Shareholders
- Returned $1.2 billion to shareholders through dividends and stock repurchases.
- $500 million of common stock repurchased as part of a $5 billion plan approved in June.
- Anticipate repurchasing another $500 million in the fourth quarter.
Segment Growth and Digital Initiatives
- Consumer and Small Business Banking saw a 3% increase in consumer loan production linked-quarter.
- Wholesale banking reported a 79% year-over-year increase in investment banking revenues, marking the strongest capital markets quarter since 2021.
- Digital initiatives led to a 35% increase in new-to-bank clients through digital channels.
- Client mobile app usage grew by 6%, and digital transactions increased by 15% compared to Q3 2023.
Operational Efficiency and Future Outlook
- Efficiency ratio improved on both linked and like-quarter basis.
- Focus on expense discipline and cost management continued.
- Mid-teens medium-term ROATCE target announced.
- Plan to continue investing in technology and risk infrastructure.
Mike Maguire says,
Financial Performance
- Truist reported GAAP net income of $1.3 billion or $0.99 per share for Q3 2024.
- Adjusted EPS was reported at $0.97 per share, incorporating effects from the sale of Truist Insurance Holdings and FDIC special assessment adjustments.
- Total revenue adjusted for prior quarter losses increased 2.4% due to a 2.2% rise in net interest income and 3.1% growth in non-interest income.
- Adjusted expenses increased by 0.9% sequentially but decreased by 2.3% year-over-year due to lower personnel costs.
Capital and Loan Performance
- The Common Equity Tier 1 (CET1) ratio remained stable at 11.6%.
- Average loans decreased by $3 billion or 1% sequentially, primarily due to lower commercial client demand.
- Consumer loans remained stable, offset by growth in auto and service finance sectors.
- Net charge-offs declined by 3 basis points, indicating stable asset quality.
Deposit and Net Interest Trends
- Average deposits decreased by 1%, driven by a reduction in brokered deposits.
- Net interest income rose by 2.2% linked-quarter, attributed to strategic balance sheet repositioning.
- Net interest margin increased by 10 basis points to 3.12%.
Guidance and Expectations
- Q4 2024 revenue is expected to decrease by 1.5% from Q3’s adjusted revenue of $5.1 billion.
- Net interest income is projected to decline by 1.5%, with an anticipated two 25 basis point federal funds rate cuts.
- Non-interest income is expected to decrease by 2% in Q4.
- Adjusted expenses are anticipated to increase by 4% primarily due to strategic investments.
Asset Quality and Shareholder Returns
- Net charge-offs for 2024 are expected to be closer to 60 basis points compared to previous 65 basis points guidance.
- Share repurchases of approximately $500 million are targeted for Q4, consistent with Q3.
- The effective tax rate is expected to be around 17.5% or 20% on a taxable equivalent basis in Q4 2024.
Q & A sessions,
Company Momentum and Strategic Focus
- The company has shown strong momentum in high-growth markets, emphasizing the strength of its franchise.
- Highly motivated teams and a strong value proposition are highlighted as key assets for continued growth.
- The focus remains on deepening existing client relationships and enhancing current product lines without expanding into new markets.
- Positive operating leverage is expected next year, indicating that revenue growth will outpace expense growth.
Financial Performance and Guidance
- Loan production grew by approximately 3% on the consumer side, signaling a recovery in loan growth activity.
- The company plans to continue significant capital returns to shareholders through dividends and share repurchases.
- Efficient use of capital to improve Return on Tangible Common Equity (ROTCE) with the expectation of a mid-teens level in the medium term.
- Expectations are set for catching up on deposit beta transition in Q1 2025, with improvement continuing thereafter.
Expense Management and Investment
- Expenses are expected to decrease this year compared to last year, showing effective cost control.
- The company is committed to investing in talent, technology, and infrastructure to support growth.
- Correlating expense growth with revenue growth opportunities is a key strategy to maintain efficiency.
- Continued focus on strong risk discipline and controls to uphold asset quality.
Market Share and Client Relationships
- Consistent increase in market share across almost all investment banking disciplines throughout the year.
- Growth in net new client acquisition and increased product penetration with existing clients.
- Maintaining primacy within the existing client base despite new competitors entering the market.
- Strong performance in both wholesale treasury penetration and consumer product penetration.
Operational Efficiency and Net Interest Margin (NIM)
- Improvement in NIM from 3.02% to 3.12% due to strategic repositioning.
- Expectation of margin compression in Q4 due to temporary beta lag, with stabilization and improvement in 2025.
- Proactive management of rate positions through swaps to manage interest rate risks and opportunities.
| Quarter | NIM (%) | Beta (%) |
|---|---|---|
| Q3 2024 | 3.12 | 15 (average) |
| Q4 2024 (Predicted) | 3.05-3.06 | Mid-high 30s |
No bad stock 