Truist Surpasses Profit Estimates on Lower Expected Credit Losses
Truist Financial (NYSE: TFC), the nation’s sixth largest bank, topped third-quarter profit estimates with net income up 45% to $ 1.1 billion.
The company’s earnings per share fell 16.8% to $ 0.79, including costs related to the merger and restructuring resulting from the merger of BB&T and SunTrust that formed Truist last December. Adjusted net income was $ 1.3 billion, or $ 0.97 per share.
The allowance for credit losses was $ 421 million in the third quarter, down from $ 844 million in the second quarter. Net write-offs were $ 326 million in the last quarter, compared to $ 316 million in the second quarter. Credit build-up reflects continued uncertainty due to the coronavirus and the expiration of back-up plans.
“Our earnings reflect a modest increase in our allowance for losses on loans and leases, benefiting from the relatively stable quality of our assets,” said CEO Kelly King. “We have also benefited from our various non-interest income generating activities and tight control of core expenses.”
The bank’s commission ratio is around 40%.
Officials said the significant increases in productive assets and liabilities were mainly due to the merger, as well as pandemic and stimulus programs.
Non-interest expense was $ 3.8 billion in the quarter, up $ 1.9 billion year-over-year. Amalgamation and restructuring charges increased expenses by $ 202 million, while other merger operating expenses increased by $ 100 million. The company also made a charitable contribution of $ 50 million to the Truist Charitable Fund. Additionally, operating costs were increased by an additional $ 26 million due to the coronavirus for various measures, including advanced cleanup.
As part of the restructuring, the Bank would have cut 769 jobs in the third quarter. It is part of the continuity of the integration plan which saw 735 job cuts in the second quarter.
Sad reported a efficiency report 67.4%, compared to 66.1% in the previous quarter. The adjusted efficiency ratio, excluding costs related to the merger, was 57.4%. Return on tangible equity (ROTCE) was 13.3%, while return on assets was 0.91%.
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