Truist Financial Corporation (TFC) Current Upside On Net Interest Margin (NIM)
$Truist Financial Corp(TFC)$ is scheduled to announce third-quarter 2024 results on 17 Oct before the opening bell.
With the borrowers' expectations of rate cuts on the positive side, the overall lending scenario was decent in the quarter. Market expects a year-over-year increase in earnings on lower revenues
While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
TFC is expected to post quarterly earnings of $0.91 per share in its upcoming report, which represents a year-over-year change of +6%.
Revenues are expected to be $5.05 billion, down 11% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 0.37% higher over the last 30 days to the current level.
Higher NII to Aid Truist's Q3 Earnings, Higher Upside To NIM
Net interest margin (NIM) reveals the amount of money that a bank is earning in interest on loans compared to the amount it is paying in interest on deposits.
NIM is one indicator of a bank's profitability and growth. The average NIM for U.S. banks was 3% as of Q1 2023. The long-term trend has been downward since Q1 1994 when the average was 4.91%.
Having disposed of its remaining stake in Truist Insurance Holdings, Truist is now a NII-heavy bank with greater long-term sensitivity to interest rates.
On the plus side, Truist's current balance sheet composition can drive reasonable net interest margin expansion in the coming easing cycle.
Having gone through something of a small transformation following a major asset disposal and balance sheet restructuring, trends in Truist's core banking business will become even more important going forward.
With that, Truist does look reasonably well-placed in terms of the nascent easing cycle, offering ongoing upside to its current net interest margin ("NIM"). With Truist's regulatory capital position also seeing meaningful improvement, this bank now has a lot more flexibility to pursue growth, and that could also help to offset some of the more negative aspects of this development.
A higher net interest margin (NIM) is better. It indicates a bank is bringing in more money on the interest it earns on loans than it is paying out in interest on bank deposits.
As we can see TFC NIM is not on the higher side, but it is manageable as compared to some of its peers and competitors banks.
Truist Financial Corporation (TFC) Year-To-Date Returns
With more than 25% returns to investors on its stock price, TFC looks promising as we are expecting a growth in its revenue and also the upside expected for a higher NIM (Net interest margin).
We could expect TFC to make another upside movement on its stock price if the earnings surprise.
Technical Analysis - MACD and MTF (Multi timeframe)
We are seeing TFC trading comfortably above both the short-term and long-term MA, and with the MACD moving in an upward trend, we would be expecting a nice upside move on its stock price before and after the earnings.
We are also getting a strong upward trend from MTF as investors should be feeling confident after TFC has now become a II-heavy bank with greater long-term sensitivity to interest rates. Truist's current balance sheet composition can drive reasonable net interest margin expansion in the coming easing cycle.
Summary
TFC is well place in terms of its ongoing upside to its current net interest margin ("NIM"), after disposing of the remaining stake in Truist Insurance Holdings, I look forward to TFC making more growth in the investment and its core banking.
Appreciate if you could share your thoughts in the comment section whether you think TFC could surprise with a better earnings with ongoing upside on its NIM?
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
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