Truist Financial Corp reported a first-quarter profit that missed Wall Street estimates on Thursday, as the lender set aside rainy-day funds to cover for the contingency of its customers defaulting on their loans. The bank's shares were down 1.4% in premarket trading after results. Despite the backdrop of turbulent economic forecasts, banks have raised their buffers for credit-loss provisions, expecting customers facing the brunt of high interest rates in an inflationary environment to miss on loan repayments.
The results come at a time when regional lenders are faced with the twin tasks of restoring customers' faith in the safety of their deposits and reassuring investors that there is no liquidity crunch. Truist CEO Bill Rogers said the bank's drop in profit was a result of "higher-than-expected funding costs."
TFC's revenues in the first quarter of the year jumped nearly 15% year-over-year to $6.1 billion, beating consensus estimates by just $10 million. Net interest income increased by 22.1%, while noninterest income soared 4.3% on year to $2.23 billion.
However, provision for credit losses amounted to $502 million compared to a benefit of $95 million seen during last year's same period.
Average loans and leases grew by 1.7% on quarter reaching $32602 billion primarily driven by growth within commercial and industrial portfolios; none having any liquidity sources attached or fully accounted for yet.
TFC shares closed higher before falling back slightly with Wednesday’s close at 3479 up from previous day totals – marking overall increase despite recent challenges faced amidst uncertain market conditions