Friday, July 19, 2013

SunTrust Banks' Q2 profit rises

Regional banking company SunTrust Banks said Friday that its second-quarter profit rose 35 percent, thanks to lower expenses and a decline in the amount set aside for loan defaults.

Atlanta-based SunTrust, which has branches in the Charlotte area, reported net income available to common shareholders of $365 million, or 68 cents per share, barely beating the 67 cents expected by analysts. That compares with $270 million, or 50 cents per share, a year ago.

"Overall for the quarter, we demonstrated progress in our strategic initiatives to grow and diversify our business, and our financial results continued to trend favorably," CEO William Rogers said in a call with analysts Friday. 

Revenue fell 7 percent, to $2.1 billion, because of declines in net interest income, mortgage-related revenue and trading income.

Profit was boosted by a 52 percent decrease in reserves for loans that go bad. The reserves were reduced to $146 million, down from $300 million a year ago.

Many other banks are also reducing such funding pools, a sign that borrowers are doing a better job of paying back loans. SunTrust said it wrote off $179 million in nonperforming loans, compared with $350 million a year ago. It attributed the decline to a decrease in residential loan charge offs.

Net interest income -- the difference between what a bank makes from loans and pays on deposits -- fell 5 percent, to $1.2 billion. The decrease stemmed, in part, from lower commercial loans swap income and the loss of dividends from SunTrust's sale last year of 59 million shares of Coca-Cola Co. stock, the bank said.

Noninterest income fell 9 percent to $858 million, as mortgage and trading income decreased.

Average deposits rose less than 1 percent to $126.6 billion.

Consumer banking and private wealth management profit rose 21 percent to $145 million. Wholesale banking profit rose 37 percent to $230 million.

But mortgage banking lost $76 million, down from a loss of $116 million a year ago.