SunTrust (STI) Beats On Q4 Earnings As Revenues Improve

SunTrust Banks' (STI - Free Report) fourth-quarter 2017 adjusted earnings of $1.09 per share outpaced the Zacks Consensus Estimate of $1.05. Also, the figure was up 21% year over year.

Results were primarily driven by a rise in revenues (supported by higher interest rates), stable adjusted expenses and lower provision for credit losses. Also, improving asset quality was a tailwind. However, a decline in loan and deposit balances was the undermining factor.

After considering one-time discrete gains including tax reform related benefit, net income available to common shareholders was $710 million, up 58% from the prior-year quarter.

For 2017, adjusted earnings of $4.09 per share beat the Zacks Consensus Estimate of $4.06. Also, the figure was up 14% year over year. After considering non-recurring items, net income available to common shareholders was $2.2 billion, up 20% from the prior year.

Rise in Revenues Supports Results

Total revenues (taxable equivalent basis) for the quarter grew 5% from the prior-year period to $2.31 billion. The figure was in line with the Zacks Consensus Estimate.

For 2017, total revenues (FTE basis) were up 4% from the prior year to $9.13 billion. The figure lagged the Zacks Consensus Estimate of $9.40 billion.

Net interest income (FTE basis) increased 7% year over year to $1.47 billion. The rise was attributable to higher earning asset yields.

On a year-over-year basis, net interest income was up 17 basis points (bps) to 3.17%, mainly reflecting higher earning asset yields and lower premium amortization in the securities portfolio. This was partly offset by higher rates paid on interest-bearing liabilities.

Non-interest income was $833 million, up 2% from the prior-year quarter. The modest rise was largely driven by an increase in commercial real estate related income and wealth management-related income.

Non-interest expenses rose 9% from the year-ago quarter to $1.52 billion. The increase was mainly due to several non-recurring items. After excluding those, operating expenses were relatively stable.

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