SunTrust Banks’ profits fell in the final quarter of 2016 and for the full year as higher expenses and set-asides for loan losses outstripped higher revenue.
The Atlanta bank’s results were better than analysts expected, beating their average estimate of fourth quarter profits per share by 2 cents a share. SunTrust said Friday it earned 90 cents per share in the fourth quarter, compared to analysts projection of 88 cents.
Last year “was the fifth consecutive year in which we grew earnings per share, improved efficiency, and increased capital return,” said SunTrust CEO William H. Rogers, Jr.
Rogers said he is confident SunTrust will “continue (its) positive financial performance trajectory” in 2017 because of the healthy economy and continuing cost-cutting moves such as closing bank branches.
SunTrust's shares were up 2.4 percent in mid-morning trading, to $55.11. SunTrust's shares, like those of other big banks, have surged since Donald Trump's election fed investor optimism.
But Georgia’s largest bank did not have the kind of heady Wall Street trading profits that have helped some bigger banks in the wake of Trump’s election.
Earlier this week, Morgan Stanley said its fourth-quarter profits surged 84 percent, to almost $1.7 billion, partly thanks to post-election trading.
J.P. Morgan and Bank of America likewise benefited from a surge in trading activity after the election.
SunTrust, which has much smaller trading and investment banking operations arm than those institutions, didn’t get a post-election boost in its bottom line.
SunTrust said its fourth quarter net income fell 4 percent, to $448 million. For the full year, profits fell 3 percent to under $1.9 billion.
SunTrust reported healthy revenue and loan growth thanks to rising consumer lending and growth across most of its businesses, reflecting stronger economic growth in the region.
Revenues were up 7.3 percent compared to the year-ago quarter, to almost $2.2 billion.
But expenses rose as well during the fourth quarter. Non-interest expenses increased by $109 million, to almost $1.4 billion.
The banks also set aside $101 million for potential loan losses, compared to $51 million a year earlier.
SunTrust had 1,367 branches and 24,375 employees at the end of 2016, compared to 1,401 branches and 24,043 employees a year earlier.
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