SunTrust Banks, Inc. reports financial results for the quarter ended September 30, 2015.
We analyze the earnings along side the following peers of SunTrust Banks, Inc. – Synovus Financial Corp., BankUnited, Inc., First Horizon National Corporation, Wells Fargo & Company, PNC Financial Services Group, Inc., BB&T Corporation, Capital Bank Financial Corp. Class A and Pinnacle Financial Partners, Inc. (SNV-US, BKU-US, FHN-US, WFC-US, PNC-US, BBT-US, CBF-US and PNFP-US) that have also reported for this period.
Highlights
- Summary numbers: Revenues of USD 2022 million, Net Earnings of USD 537 million, and Earnings per Share (EPS) of USD 1.
- Net interest income margins narrowed from 63.25% to 59.89% compared to the same quarter last year.
- Net loan assets changed 1.22% compared to same period last year and 0.82% from previous period, total deposits changed 7.23% compared to same period last year and 0.99% from previous period.
- Earnings decline largely a result of non-operational activity, pretax margins improved from 33.47% to 35.91%.
The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):
| 2014-09-30 | 2014-12-31 | 2015-03-31 | 2015-06-30 | 2015-09-30 | |
|---|---|---|---|---|---|
| Relevant Numbers (Quarterly) | |||||
| Revenues (mil) | 1921 | 1878 | 1948 | 2042 | 2022 |
| Revenue Growth (%YOY) | 2.51 | -6.38 | 7.39 | 3.71 | 5.26 |
| Earnings (mil) | 572 | 393 | 428 | 482 | 537 |
| Earnings Growth (%YOY) | 204.26 | -6.87 | 6.47 | 21.72 | -6.12 |
| Net Margin (%) | 29.78 | 20.93 | 21.97 | 23.6 | 26.56 |
| EPS | 1.06 | 0.72 | 0.78 | 0.89 | 1 |
| Return on Equity (%) | 10.14 | 6.7 | 7.11 | 8.04 | 9.16 |
| Return on Assets (%) | 1.24 | 0.83 | 0.9 | 1.02 | 1.14 |
Access our Ratings and Scores for SunTrust Banks, Inc.
Market Share Versus Profits
STI-US‘s change in revenue this quarter compared to the same quarter last year of 5.26% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that STI-US is holding onto its market share. Also, for comparison purposes, revenues changed by -0.98% and earnings by 11.41% compared to the immediate last quarter.
Earnings Growth Analysis
STI-US‘s year-on-year decline in earnings was influenced by a weakening of net interest income margins from 63.25% to 59.89% as well as issues with loan loss provisions. As a result, net interest income after provisions margins went from 58.41% to 58.31% in this period. For comparison, net interest income margins were 55.00% and net interest income after provisions margins 53.72% in the last period. In addition, loan loss provisions as a percentage of net interest income were 2.64% this period and 7.65% a year ago.
Net Loans and Total Deposits
A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.
1445524966.png "Loan Assets Growth Rate History (Qtr YOY)")
1445524967.png "Total Deposits Growth Rate History (Qtr YOY)")
The firm’s decline in net interest income margins was influenced primarily by the relative increase in the levels of net loan assets. On an absolute basis, net loan assets changed 1.22% compared to the same period last year and 0.82% from the previous period, while total deposits changed 7.23% compared to the same period last year and 0.99% from the previous period.
Margins
Non-operational activities are the primary cause of the company’s fall in earnings. As a matter of fact, both operating margins and pretax margins increased. Operating margins went from 33.47% to 35.91% and pretax margins improved from 33.47% to 35.91%>
Access our Ratings and Scores for SunTrust Banks, Inc.
Company Profile
SunTrust Banks, Inc. is a bank and financial holding company that engages in the provision of financial services. It offers deposit, credit, mortgage banking, trust and investment, asset management, securities brokerage, and capital market services. The company operates through the following segments: Consumer Banking and Private Wealth Management, Wholesale Banking, Mortgage Banking, and Corporate Other. The Consumer Banking and Private Wealth Management segment consists of two primary businesses: Consumer Banking and Private Wealth Management. The Consumer Banking business provides consumer deposits, home equity lines, consumer lines, indirect auto, student lending, bank card, and other consumer loan and fee-based products. The Private Wealth Management business offers loans, deposits, brokerage, professional investment management, and trust services to individual and institutional clients. The Wholesale Banking segment includes five businesses: Corporate and Investment Banking, Commercial and Business Banking, Commercial Real Estate, RidgeWorth, and Treasury and Payment Solutions. The Corporate and Investment Banking business delivers comprehensive capital markets, corporate, and investment banking solutions including advisory, capital raising, and financial risk management. The Commercial and Business Banking offers traditional banking products and investment banking services. The Commercial Real Estate business provides financial solutions for commercial real estate developers, owners, and investors including construction, mini-perm, permanent real estate financing, tailored financing, and equity investment solutions. The RidgeWorth business operates as an investment advisor and holding company with ownership in other institutional asset management boutiques offering an array of equity and fixed income capabilities. The Treasury and Payment Solutions business provides the company’s business clients with services required to manage their payments and receipts including card, wire transfer, automated clearing house, check, and cash. The Mortgage Banking segment offers residential mortgage products nationally through its retail and correspondent channels. The Corporate Other segment involves management of the company’s investment securities portfolio, long-term debt, end user derivative instruments, short-term liquidity and funding activities, balance sheet risk management, and most real estate assets. The company was founded in July 12, 1984 and is headquartered in Atlanta, GA.
CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of STI-US.