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Truist Financial Corporation (NYSE:) is set to announce its Q3 2023 results on Wednesday, October 19, in a lending environment challenged by higher interest rates and macroeconomic uncertainty. The company experienced an upswing in commercial and industrial loan demand in September, which led to projected total loans of $325.4 billion, a slight increase from the previous quarter.
The estimated average earning assets stand at $497.6 billion, reflecting a 1.7% fall from the prior quarter’s figure. The Federal Reserve’s rate increases have positively influenced TFC’s net interest margin and net interest income (NII), although an inverted yield curve and increasing funding costs have likely exerted pressure.
Non-interest income saw minimal growth in Q3, but TFC’s competitive deposit rates likely supported service charges on deposits. Mortgage banking income may have faced strain due to higher mortgage rates and inflation.
TFC has been grappling with escalating expenses due to technology upgrades and strategic expansion but aims for gross savings of about $750 million over 12 to 18 months through a strategic expense-saving program. The company is expected to have allocated funds for potential bad loans considering the global slowdown risk, but optimism about the U.S. economy suggests a low reserve build for Q3.
InvestingPro data shows that TFC has a market cap of 38.61B USD and a P/E ratio of 6.65, which indicates that it is trading at a low earnings multiple. The company’s revenue stands at 22.33B USD with an operating income of 8636M USD. The company’s return on assets stands at 1.12%. The company also offers a significant dividend yield of 7.32%, with a dividend growth of 8.33%.
InvestingPro Tips highlight that TFC has high earnings quality, with free cash flow exceeding net income. The company has raised its dividend for 8 consecutive years, demonstrating a commitment to rewarding shareholders. However, 8 analysts have revised their earnings downwards for the upcoming period, indicating potential challenges ahead. The company is a prominent player in the Banks industry and has maintained dividend payments for 51 consecutive years. It’s worth noting that the company has been profitable over the last twelve months.
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