Regions Financial ( NYSE: RF ) boosted its 2022 guidance for net interest income, revenue and loan growth, but also increased its guidance for costs. It also capital markets business revenue in Q3 to be at the lower end of its guidance range, according to its Q2 earnings slides. Q2 earnings and revenue both beat Wall Street expectations.
The Birmingham, Alabama-based bank expects 2022 average loan balances to rise ~8% from the previous year, up from its previous guidance of ~4%-5%. That factors in consumer exit portfolios that are expected to reduce average loans by ~$700M during the year.
Regions ( RF ) expects 2022 net interest income growth of ~16%-18%, up from its previous guidance of +10%-12%; excluding PPP, up 19%-21% vs. its prior view of +13%-16%.
NII is expected to rise 8%-10% in Q3; Q4 NII is expected to be ~23%-25% higher than Q1 2022.
FY 2022 total adjusted revenue is expected to rise 7.5%-8.5% from 2021, up from its previous guidance of 4.5%-5.5%. It expects capital markets to generate quarterly revenue in $90M-$110M range, ex CVA/DVA, with Q3 in the lower end of the range.
Its changes in non-sufficient funds/overdraft policy are expected to result in FY2022 service charges of ~$600M and FY2023 charges of ~$550M.
Regions ( RF ) expects FY2022 adjusted noninterest expense to rise 4.5%-5.5% Y/Y, up from 3%-4% in its previous guidance, and expects to generate 3.00% adjusted operating leverage.
Mortgage revenue is expected to be lower this year, compared with 2021, but "remains a key component to fee revenue," the company said.
Q2 EPS of $0.59, topping $0.53 consensus, increased from $0.55 in Q1 and fell from $0.77 in Q2 2021.
Q2 net interest income (taxable equivalent basis) of $1.12B rose from $1.03B in the prior quarter and from $975M in the year-ago quarter. Adjusted net interest margin (FTE) increased to 3.44% form 3.43% in the prior quarter and 3.31% in the year-ago quarter.
Noninterest income of $640M rose from $584M in Q1 and from $619M in Q2 2021.
Adjusted total revenue of $1.75B, beating the $1.69B consensus, climbed from $1.60B in the prior quarter and from $1.56B in the year-ago period.
Total average loans increased to $90.8B from $87.8B in the previous quarter. Total average deposits of $139.6B rose from $138.7B in the prior quarter.
Provision for credit losses were $60M vs. a benefit of $36M in Q1 and benefit of $337M in Q2 2021. Net loans charged-off as a percentage of average loans (annualized) dropped to 0.17% in Q2 2022 vs. 0.21% in Q1 and 0.23% in Q2 2021.
Conference call at 10:00 AM ET.
Earlier, Regions Financial non-GAAP EPS of $0.59 beats by $0.06, revenue of $1.75B beats by $60M
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Regions Financial boosts 2022 revenue guidance, but also sees higher costs