Truist(TFC) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income available to common shareholders of $1,200,000,000 or $0.90 per share, which included $0.02 of restructuring charges and $0.01 of losses from the sale of certain investment securities [6][18] - Adjusted revenue increased by 2.1% linked quarter, driven by a 2.3% growth in net interest income and a 1.8% growth in non-interest income [19] - Average loans held for investment increased by 2% on a linked quarter basis, with end of period loans increasing by $10,200,000,000 or 3.3% [20] Business Line Data and Key Metrics Changes - In consumer and small business banking, average loan balances increased by 2.8% linked quarter, with significant growth in residential mortgage and indirect auto loans [11] - Wholesale loans saw a 1.5% growth in average loans and a 2.9% increase in end of period loans, driven by new and existing clients [12] - Wealth management experienced a 27% increase in year-to-date assets under management (AUM) from wholesale and premier clients compared to the same period last year [13] Market Data and Key Metrics Changes - The company added nearly 37,000 new consumer and small business accounts, attracting younger clients with higher average balances [10] - Average deposits increased by $8,300,000,000 sequentially, or 2.1%, driven by growth in interest checking and time deposits [21] - The cumulative interest-bearing deposit beta declined from 43% to 37% on a linked quarter basis [22] Company Strategy and Development Direction - The company is focused on executing strategic growth initiatives, maintaining credit and risk discipline, and returning capital to shareholders [33] - Investments are being made in talent, technology, and risk infrastructure to enhance client experience and operational efficiency [34] - The company aims to achieve positive operating leverage in 2025 despite challenges in investment banking and trading [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of both consumer and wholesale client bases, noting good credit quality and liquidity among clients [42] - The company anticipates a recovery in investment banking and trading revenue in the second half of 2025 based on current pipelines and improved market conditions [25] - The outlook for revenue growth remains unchanged, with expectations for a 1.5% to 2.5% increase relative to 2024 adjusted revenue [29] Other Important Information - The company returned $1,400,000,000 of capital to shareholders through dividends and share repurchases during the quarter [9] - The CET1 ratio was reported at 11%, with a strong capital position allowing for balance sheet growth and capital returns [28] - The company plans to target approximately $500,000,000 of share repurchases during the third quarter [10] Q&A Session Summary Question: Overall sentiment among the customer base - Management noted strong consumer business performance and good credit quality, with new clients impressed by the company's purpose-driven focus and product capabilities [40][44] Question: Anticipated pace of share repurchase - The reduction in share repurchase target was described as opportunistic, with a focus on maintaining a balance between capital return and banking franchise growth [46] Question: Deposit competition and costs - Management indicated that deposit competition is rational, with expectations for deposit costs to stabilize and improve in the coming quarters [56][58] Question: Fee revenue growth and trading recovery - Management observed a bounce back in trading and investment banking revenue, with expectations for normalized results in the third quarter [65] Question: Trajectory towards 15% ROTCE - Management highlighted various initiatives to improve profitability, including capital-efficient revenue generation and margin improvements [72][74] Question: Restructuring charges and investments - Most restructuring charges were related to severance, not merger-related, and the company continues to invest in technology and talent while maintaining expense discipline [85][88]