Updated Aug 13 at 11:22am ET.
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Cleveland Fed President Beth Hammack stated that the central bank should raise interest rates now to bring down inflation. For a traditional lender like Truist, interest rate moves are the primary driver of profit. When rates rise, banks can eventually charge more for loans, but they also have to pay more to customers who keep money in savings accounts.
This call for higher rates comes at a sensitive time for Truist. The bank is currently trying to keep its net interest margin, the spread between what it earns on loans and pays on deposits, above 3 percent. If rates move up quickly, it could squeeze that spread in the short term as the bank competes to keep depositors from moving their cash elsewhere.
Source: Reuters
John Stucker will head sales for the middle market segment, which focuses on companies that are too large for small-business banking but not quite global corporations. This is a key growth area for Truist as it tries to win more business across the Southeast and Mid-Atlantic regions.
Source: PRNewsWire
The board approved a dividend of $0.52 per share, which will be paid on September 1. For a bank like Truist, these regular payouts are a core part of the return for shareholders, especially as the company works to return more cash after selling its insurance unit.
Source: PRNewsWire
Shimna Sameer will lead the division that manages money for high-net-worth clients. Growing this business is important because it brings in steady fees that do not depend on interest rates, helping to balance out the bank's earnings from loans.
Source: PRNewsWire
JPMorgan now expects the stock to perform worse than other banks in the sector. While the bank recently reported higher profits, some analysts are concerned about the costs of keeping deposits and how much the bank can grow its lending business in the near term.
Analysts downgraded the stock several times following the company's second-quarter earnings report in late July. Most analysts are split with 27 buys and 27 holds or sells, and the average target of $55 suggests 4% upside.
The bank has cleared the profit bar in five of the last eight quarters. Management tends to set a realistic bar, and recent results show the business is becoming more efficient.
| Expectation | |
|---|---|
| EPS | $1.11 |
| Revenue | $5.34B |
PRNewsWire · Press release · Jul 28
PRNewsWire · Press release · Jul 28
Seeking Alpha · Opinion · Jul 21
Seeking Alpha · Opinion · Jul 20
PYMNTS · Jul 17
Reuters · Jul 17
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