TFC Earnings: Truist Financial Drops on Mixed Q1 Numbers

Truist Financial (NYSE:TFC) shares are ticking marginally lower today after the financial services major reported mixed first-quarter numbers and issued a lackluster financial outlook. With a year-over-year decline of almost 9%, Truist Financial reported revenue of $4.87 billion, which fell short of expectations by $830 million. Conversely, its EPS of $0.90 outperformed estimates by $0.12.

High Funding Costs Bite Truist

During the quarter, Truist’s net interest income (NII) declined by 12.6% owing to lower earning assets and higher funding costs. Concurrently, its net interest margin contracted by 28 basis points (YoY). On the other hand, the company’s noninterest income increased to $1.45 billion from $1.42 billion a year ago on the back of higher investment banking and trading income.

Tepid Loan Demand

Sequentially, the quarter was marked by a 1.3% decline in Truist’s average loans and leases, attributed to declines in its consumer, commercial, and industrial portfolios. Additionally, there was a 1.6% drop in its average deposits, owing to declines in its non-interest-bearing, money market, and savings deposits. Simultaneously, Truist’s ROCE (return on capital employed) contracted to 8.4% from 10.3% a year ago.

Truist’s Unimpressive Outlook

For the upcoming quarter, Truist expects a nearly 2% sequential decline in its revenue. For Fiscal year 2024, the company foresees a 4% to 5% drop in its top line.  

What Is the Target Price for TFC Stock?

Truist’s share price has rallied by nearly 40.6% over the past six months. Overall, the Street has a Moderate Buy consensus rating on Truist, alongside an average TFC price target of $41.84. However, analysts’ views on the stock could see a revision following today’s earnings report.

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