Truist Earnings: Solid Quarter Sets the Tone for Core Banking Growth in 2025

Key Morningstar Metrics for Truist Financial

• Fair Value Estimate: $47.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

What We Thought of Truist Financial’s Earnings

Truist Financial TFC reported net income to common shareholders of around $1.2 billion, or $0.91 per diluted share, on $5.1 billion of taxable-equivalent revenue. The company posted solid results for the fourth quarter and a 2025 full-year outlook that’s mostly in line with our expectations. As we incorporate these results, we don’t expect a material change to our $47 per share fair value estimate and still view shares as fairly valued.

Truist reported a 12.9% return on tangible common equity for the quarter and 13.3% for the full year, despite the sale of Truist Insurance Holdings in the second quarter. A core part of our thesis for Truist to hit its medium-term mid-teens return target involves sustained strength in the bank’s core banking franchise and positive operating leverage. On an adjusted basis, Truist achieved just 10 basis points of positive operating leverage for the year. Taking advantage of growth opportunities and managing investments well will be key to a cleaner year of progression toward the firm’s medium-term return target.

Net interest margin declined by 5 basis points in the quarter. This resulted from a decline in overall loan yields, largely offsetting the benefits of higher securities’ yields from the bank’s balance sheet repositioning after the insurance business sale and lower deposit costs from the 2024 rate cuts. Net interest income saw a slight decline that can primarily be attributed to a lag in deposit repricing compared with earning asset repricing. Ending loans also declined 60 basis points more than we expected for the full year. We would like to see some improvement in key lending areas within the next two quarters to demonstrate stronger organic growth in the core banking franchise.