Higher NII to Aid Truist's Q4 Earnings, Lower Fee Income to Hurt

Core Viewpoint - Truist Financial (TFC) is set to announce its fourth-quarter and full-year 2024 results on January 17, with expectations of improved lending scenarios due to recent rate cuts [1] Lending and Loan Demand - Demand for commercial and industrial (C&I) loans, which make up about 50% of TFC's total loans, increased in the fourth quarter, alongside a rise in consumer loan demand, which accounts for nearly 40% of total loans [2] - The average loan balance for TFC is projected to be $300.1 billion, reflecting a 4.4% decrease from the same quarter last year [2] Earnings and Income Estimates - The Zacks Consensus Estimate for TFC's average earning assets is $468.3 billion, indicating a 2.7% decline year-over-year, while the company's own projection is $472.8 billion [3] - The consensus estimate for net interest income (NII) is $3.56 billion, suggesting a slight year-over-year increase, while the company's estimate is $3.66 billion [5] - Total non-interest income is estimated at $1.44 billion, representing a 33.2% decline from the previous year, with the company projecting it at $1.41 billion [10] Fee Income and Non-Interest Income - Investment banking and trading income is expected to rise significantly, with a consensus estimate of $299.7 million, reflecting an 81.6% increase [7] - Lending-related fees are projected to decline by 40.3%, with a consensus estimate of $91.3 million [8] - Wealth management income is expected to increase by 2.8%, with a consensus estimate of $355.6 million [9] Expenses and Asset Quality - Total adjusted non-interest expenses are estimated at $2.91 billion, indicating a 6.9% increase year-over-year, driven by technology investments and inflationary pressures [11] - The provision for credit losses is projected at $455.3 million, showing a 20.4% decline year-over-year, while non-performing assets are expected to rise by 2.9% to $1.53 billion [13] Earnings Outlook - The consensus estimate for TFC's earnings is 87 cents per share, revised down by 1.1% over the past week, but still indicating a 7.4% increase from the previous year [15] - Adjusted tax-equivalent revenues are projected to decline by 0.5-1% in 2024, with adjusted expenses expected to decrease slightly [16]