Regions Financial Q3 profit beats estimates on higher interest income

Overview

• U.S. regional bank's Q3 adjusted revenue met analyst expectations; adjusted EPS beat consensus

• Company reported record capital markets and treasury management income for the quarter

• Asset quality improved with lower net charge-offs and declines in criticized and non-performing loans

Outlook

• Regions did not provide specific financial guidance for the upcoming quarter or full year in its press release

Result Drivers

• NET INTEREST INCOME - Co said net interest income rose 2% QoQ, driven by fixed-rate asset turnover, average loan growth, higher hedging income, credit interest recoveries, one additional day in the quarter and continued prudent management of deposit costs

• CAPITAL MARKETS & TREASURY MANAGEMENT - Record capital markets income up 27% QoQ, driven by higher M&A advisory revenue, securities underwriting and placement fees, commercial swap income and syndication revenue; record treasury management income also contributed

• CREDIT QUALITY IMPROVEMENT - Co said asset quality trends improved with net charge-offs down 13 bps QoQ, declines in criticized and non-performing loans, and allowance coverage of non-performing loans increased to 275%

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 6 "strong buy" or "buy", 14 "hold" and 3 "sell" or "strong sell"

• The average consensus recommendation for the banks peer group is "buy."

• Wall Street's median 12-month price target for Regions Financial Corporation is $31.50, about 15.3% above its October 15 closing price of $27.31

• The stock recently traded at 10 times the next 12-month earnings vs. a P/E of 11 three months ago

Reuters Recommended Reads

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• Oct 13 - Citigroup Q3 revenue rises, partly on strength in services, wealth segments

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)