Truist Financial Earnings: Revenue Expectations Stabilizing, Expense Cuts Will Be Big Focus

Narrow-moat-rated Truist reported EPS of $0.80 that was a bit below our forecast of $0.89; although once certain one-time items related to service fee refunds are factored in, the bank would have met our forecasts for the quarter. After disappointing in the previous quarter, current quarter revenue expectations stabilized and the expense outlook remained roughly on track, but adding in additional exclusions to the adjusted expense guide implies to us the bank is more likely to come in on the high end of the guidance range. The bank reaffirmed its 0%-1% expense growth target for next year as it begins on $750 million in gross expense cuts. Given the bank’s efficiency ratio, above 60%, and the disappointment in the lack of efficiency gains following the merger of BB&T and Suntrust, we think improving the efficiency ratio and keeping expense growth below peers will be a focus for investors.