U.S. Regional Bank Regions Financial Reports Third-Quarter Results

(Reuters) – U.S. regional bank Regions Financial (NYSE:RF) reported a decline in third-quarter profit on Friday, impacted by rising deposit costs and weak loan demand.

To prevent customers from switching to competitors or higher-yield alternatives like money market funds, banks have raised deposit rates. Concurrently, the industry is experiencing low loan demand as borrowers await a more favorable interest-rate climate.

The Birmingham, Alabama-headquartered bank's net interest income (NII)—the difference between earnings from loans and interest paid on deposits—fell 5.7% to $1.22 billion in the quarter.

However, the Federal Reserve's monetary policy easing in September, along with anticipated further rate cuts, has sparked hopes for a rebound in loan growth and relief from deposit cost pressures.

Regions Financial now forecasts a 2024 NII of $4.8 billion, aligning with its previous prediction range of $4.7 billion to $4.8 billion.

In a positive development, capital markets income at Regions Financial surged 43.8%, driven by increased deal-making and debt underwriting fees, while wealth management income rose 14.3% this quarter.

These increases reflect broader trends seen among larger competitors benefiting from a rebound in investment banking activities during the third quarter.

The provision for credit losses—funds set aside for potentially unpaid loans—fell to $113 million, down from $145 million the previous year.

Net income decreased 4.1% to $446 million in the three months ending September 30, compared to $465 million the previous year. On a per-share basis, the third-quarter profit remained steady at 49 cents.

Shares of Regions Financial have appreciated about 24% year-to-date, as of the last closing date.