Truist Financial Q2 Earnings Lag as Provisions Increase Y/Y

Core Insights - Truist Financial's second-quarter 2025 adjusted earnings were 91 cents per share, missing the Zacks Consensus Estimate by one cent, with no change from the prior-year quarter [1][9] - The company experienced an increase in provisions, impacting results, but benefited from higher net interest income and total non-interest income, along with reduced expenses [1][9] Financial Performance - Total revenues for the quarter reached $4.99 billion, compared to negative revenues of $1.68 billion in the same quarter last year, slightly exceeding the Zacks Consensus Estimate of $4.98 billion [3] - Tax-equivalent net interest income (NII) rose 1.7% year over year to $3.64 billion, surpassing the estimate of $3.61 billion, while the net interest margin (NIM) remained stable at 3.02% [3] - Non-interest income was reported at $1.40 billion, a significant recovery from negative fee income of $5.21 billion in the prior-year quarter, driven by a decrease in securities losses [4] - Non-interest expenses decreased by 3.5% year over year to $2.99 billion, primarily due to lower personnel and regulatory costs [5] Credit Quality - Provision for credit losses increased to $488 million, up 8.2% from the prior-year quarter, while net charge-offs were 0.51% of average loans and leases, down seven basis points [7] - Total non-performing assets (NPAs) were $1.32 billion, a decrease of 10.8% from a year ago, better than the expected $1.51 billion [8] Profitability and Capital Ratios - Return on average common equity improved to 8.1% from 6.1% in the second quarter of 2024, while the Tier 1 risk-based capital ratio decreased to 12.3% from 13.2% year over year [10] - The common equity Tier 1 ratio was reported at 11%, down from 11.6% in the prior-year quarter [10] Shareholder Actions - The company repurchased shares worth $750 million during the reported quarter [11] Outlook - The company anticipates that decent loan demand and business restructuring initiatives will continue to support revenue growth, although elevated expenses and weak asset quality present challenges [12]