Consumer and commercial real estate lending grew markedly at SunTrust Banks in Atlanta, but ultimately it was margins that drove a double-digit increase in profits.
Net income at the $208 billion-asset company rose 38% from a year earlier to $722 million. Earnings per share of $1.49 were 18 cents higher than the mean estimate of analysts compiled by FactSet Research Systems.
Overall, loan growth was flat because commercial and industrial loans and construction loans declined, offsetting the CRE and consumer loan growth. Total loans held for investment held steady at $145 billion in a year-over-year comparison.
But net interest income after the loan-loss provision rose 11% to $1.5 billion. The net interest margin widened 17 basis points to 3.23%.
And yields improved on earning assets in both loans and securities. Average yields in total earning assets rose 37 basis points to 3.82%.
The consumer growth stemmed from SunTrust's LightStream online-loan platform, an expansion of credit cards and partnerships with third-party lenders like GreenSky. Direct consumer loans jumped 15% to $9.4 billion. Credit cards increased 10% to $1.6 billion.
“Consumer direct continues to grow faster than the rest of the book,” Chief Financial Officer Allison Dukes said during a conference call Friday. “We’ve got good momentum behind both commercial and consumer lending.”
CRE loans held for investment rose 20% to $6.3 billion. Construction loans dropped 14% to $3.5 billion, although Chairman and CEO William Rogers said during the call there has been a recent uptick in construction projects in the Southeast, particularly for build-to-suit corporate headquarters projects.
Noninterest income was little changed at $829 million. Growth in investment banking and trading income was offset by declines in deposit service charges and mortgage income.
Noninterest expense was flat at $1.4 billion. The efficiency ratio improved to 59.98% from 62.24%; the lower the efficiency reading for a bank, the better.
