Charlotte, North Carolina – Truist Financial Corp. faced challenges in the first quarter, reporting lower lending profits than analysts had anticipated. The bank attributed this to the need to pay higher interest rates on deposits, which remained elevated during the quarter. As a result, Truist trimmed its revenue guidance for the remainder of the year, reflecting the ongoing impact of these factors on its financial performance.
Despite efforts to navigate the challenging environment, the bank’s net interest income fell short of analysts’ expectations, coming in at $3.43 billion on a taxable-equivalent basis. Truist’s CEO Bill Rogers acknowledged the subdued loan demand and continued pressure on deposit costs as contributing factors to the lower-than-expected results. Executives shared during a conference call with analysts that they anticipate net interest income to reach its low point in the second quarter before experiencing modest improvement for the rest of the year.
Investors reacted to the news by causing Truist’s shares to drop by 0.8% to $36.52 in early trading. The bank’s stock has experienced a 0.9% decline since the beginning of the year, reflecting investor concerns about the impact of higher borrowing costs and the Federal Reserve’s decision to hold off on interest rate cuts amidst inflation concerns.
Looking ahead, Truist revised its revenue guidance for the year, now expecting a decline of about 4% to 5% from the previous year’s total. This adjustment excludes certain one-time impacts, such as interest income earned from specific transactions. The bank also announced plans to resume share buybacks later in the year, contingent on market conditions and other factors.
During the quarter, Truist finalized a deal to sell its insurance holdings to a consortium led by Stone Point Capital and Clayton Dubilier & Rice. This transaction, valued at $15.5 billion, is expected to be completed in the second quarter. The bank indicated that it would explore various options for deploying capital following the sale.
In addition to these developments, Truist’s investment banking staff were informed that they would be required to work in the office five days a week starting in June. This decision comes as part of the bank’s broader efforts to align itself with industry standards and enhance operational efficiency.
Truist, formed from a merger in 2019, has faced challenges in performance compared to its peers. The bank’s shares fell by 14% in 2023, making it one of the worst performers in the KBW Bank Index. Despite these setbacks, Truist remains focused on navigating current market conditions and driving sustainable growth in the future.