SunTrust's Adjusted Earnings Top Expectations
16 October 2015 - 10:34PM
Dow Jones News
By Lisa Beilfuss
SunTrust Banks Inc. said its profit fell in its latest quarter
because of a tax benefit that lifted the comparable quarter's
earnings. On an adjusted basis, the regional lender reported 23%
profit growth and topped expectations.
The bank reported a profit of $537 million, down from $576
million a year earlier. On a per-share basis, earnings fell to $1
from $1.06. Excluding one-time items, including a tax benefit,
per-share profit rose to $1 from 81 cents.
Revenue edged 1.3% higher to $2.06 billion. Analysts projected
84 cents in earnings per share on $2.04 billion in revenue,
according to Thomson Reuters.
The Atlanta-based bank, which focuses on consumers and small
businesses in the U.S. southeast and mid-Atlantic, said lending and
deposits grew during the quarter. Average loans rose 1.6% from a
year earlier, boosted by SunTrust's corporate business. Fellow
regional bank KeyCorp also cited strength in its corporate-focused
businesses for its third-quarter profit increase. Deposits
increased about 10%.
A lower loan-loss provision, slashed by 66% from a year earlier
to $32 million, aided the bottom line. SunTrust cited continued
improvement in asset quality.
Fee revenue rose 4% during the period to $811 million, thanks to
higher investment banking and mortgage income, in addition to
higher gains on the sale of investment securities. SunTrust, like
other regional lenders pinched by low interest rates, has tried to
boost noninterest income in an effort to support profit. At the
same time, the bank's net interest margin, tied largely to interest
rates, bounced from the second quarter. The metric rose to 2.94%
from 2.86%, though it remained below 3.03% a year earlier.
SunTrust, which has had a more bearish outlook and has assumed
no Federal Reserve rate increases this year, has meanwhile moved to
slash costs. In the third quarter, noninterest expenses rose
slightly from a year earlier, but came down about 5% from the
second quarter.
The lender managed to bring its efficiency ratio, a measure of
expenses against revenue where a lower figure is better, to 61.4%
from 62% in last year's quarter. Executives have said they are
trying to bring the metric below 63% for the full year of 2015, but
have cautioned that the task is proving difficult as rates remain
low. For the nine months ended in September, the metric stood at
63.2%.
Shares in the bank, down about 14% this year, were inactive
premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
October 16, 2015 07:19 ET (11:19 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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