By Nathalie Tadena
BB&T Corp.'s (BBT) third-quarter earnings fell 43% as net
interest margin, a key measure of lending profitability,
slipped.
The latest period's results were also impacted by a $235 million
tax adjustment. Excluding this adjustment, per-share earnings
improved from a year earlier, which the company said was driven by
an improvement in credit quality to the best levels in nearly six
years.
U.S. banks are grappling with a slow U.S. recovery, a range of
new regulations and still-weak loan demand. Banks are also highly
sensitive to interest-rate changes, since any shift can affect how
much it costs them to borrow money and how much they can charge to
lend that money to customers. Regional banks, which rely more
heavily on lending income, have been pressured recently by low
interest rates.
BB&T's net interest margin, the profit margin from lending
and investing, slipped to 3.68% from 3.94% a year earlier and 3.7%
in the prior quarter.
Like most other lenders, the mid-Atlantic and Southeast regional
bank's results have been helped in recent quarters by improving
credit conditions and lower reserves needed to cover bad loans. The
allowance for loan and lease losses totaled $1.71 billion versus
$1.91 billion in the year-earlier period.
Overall, BB&T posted a profit of $268 million, or 37 cents a
share, down from $469 million, or 66 cents a share, a year earlier.
Excluding the impact of a $235 million tax adjustment in the latest
period, adjusted earnings totaled 70 cents a share. Revenue slipped
5% to $2.36 billion. Analysts surveyed by Thomson Reuters had
projected earnings of 70 cents a share on revenue of $2.4
billion.
Average loans and leases held for investment totaled $115.15
billion, up 0.8% sequentially and up 2.2% from a year earlier.
Average loans held for investment increased $876 million, or an
annualized 3%, from the second quarter.
Shares closed at $34.22 and were inactive premarket. The stock
is up 18% since the start of the year.
Write to Nathalie Tadena at nathalie.tadena@wsj.com
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