Rise in NII to Support Truist's Q1 Earnings, Lower Fee Income to Hurt

Core Viewpoint - Truist Financial (TFC) is set to announce its first-quarter 2025 results on April 17, with expectations of a mixed performance due to subdued loan demand and varying trends in different loan categories [1][2]. Lending and Loan Demand - Demand for commercial and industrial (C&I) loans, which make up about 50% of TFC's total loans, was subdued in the first two months of the quarter, while consumer loan demand, accounting for nearly 40%, showed improvement [2]. - The average loan balance for TFC is projected to be $309.3 billion, reflecting a slight decline from the previous year [3]. Interest Income and Margin - The consensus estimate for net interest income (NII) is $3.56 billion, indicating a 4% year-over-year increase, while the company's estimate is slightly higher at $3.57 billion [4]. - Management anticipates a 2% sequential decline in NII due to fewer days in the quarter and lower average deposit balances, although excluding this impact, NII is expected to remain stable [5]. Non-Interest Income - The consensus estimate for service charges on deposits is $225.2 million, unchanged from the prior year, while card and payment-related fees are estimated at $223.3 million, also flat year-over-year [6]. - Residential mortgage income is expected to rise to $107.3 million, a 19.2% increase, driven by stable mortgage rates [7]. - Investment banking and trading income is projected to fall by 17.1% to $267.9 million due to market volatility and tariff concerns [8]. - Lending-related fees are expected to decline by 5.4% to $90.8 million, reflecting the subdued lending environment [9]. - Wealth management income is anticipated to decrease by 5% to $338.3 million due to poor equity market performance [10]. - Overall, total non-interest income is estimated at $1.4 billion, a 2.9% drop from the previous year [11]. Expenses and Asset Quality - Total adjusted non-interest expenses are projected to be $2.86 billion, a 4.4% increase from the prior year, driven by technology investments and inflation [12]. - The provision for credit losses is estimated at $470.1 million, a 6% year-over-year decline, while total non-accrual loans and leases are expected to rise by 4% to $1.47 billion [14]. Earnings Expectations - The consensus estimate for TFC's earnings is 86 cents per share, reflecting a 4.4% decline from the previous year, with total sales projected at $4.92 billion, a 2.2% increase [16].