Truist posted second-quarter results that show continued adoption of digital channels for mobile banking — and a stabilizing of deposit flight seen earlier in the year amid March’s banking-run-fueled volatility.
Bill Rogers, CEO, said that “I don’t think it’s a surprise to anybody on this call that the increasing levels of uncertainty in our economy, the impact of interest rates on funding costs and a new sort … operating environment for our industry are impacting our results and plans.” Based on the macro outlook, per company materials, the provision for credit losses was $538 million in the latest quarter, up from $171 million in the year-ago period.
Despite those challenges, he said, loan balances have been relatively stable. Company materials showed that average loans were up 0.1% from the first quarter of 2023 to $326 billion in the most recent period.
Average deposits were down 2% largely due to client activity in March.
“The overall deposit trends have stabilized significantly since that timeframe,” added Rogers, “and our conversations with our clients and our pipelines have improved.”
In reference to digital technology and initiatives, said Rogers, “digital engagement trends remain positive, reinforcing the importance of continued investment in digital due to its close association with relationship primacy, client experience, and account growth.”
Against that backdrop, Truist’s mobile app users grew 6%, to 4.6 million users. Zelle transactions surged 31% to 22.9 million, and overall digital transactions gained 9% to 70.8 million. Truist One’s embrace skews decidedly younger, as management noted on the call that 79% of new applications come from millennials and Generation Z consumers.
The company said its digitally-originated Truist One Checking average account balance was up 17% vs. 1Q ’23, with 91% of clients digitally active.
Digital transactions now account for 61% of bank transactions, said Rogers.
CFO Mike Maguire said that non-performing loans rose 0.1% “though they remain manageable,” and make up 0.4% of the loan book. Looking ahead, he said revenues will be down in the third quarter by 4% due to seasonally lower insurance revenue and slightly lower loan balances.
Investors sent the shares down 4% during intraday trading.