SunTrust Banks Inc. raised its guidance for loan and deposit growth this year.
The $179 billion-asset Atlanta company also expects earnings to grow 9% to 11% a year, and operating revenue to grow more than 7% a year, over the next five years, according to presentation materials it filed with regulators Tuesday to coincide with an analyst day in New York.
Chief financial officer Mark A. Chancy said during a presentation for the daylong event that his company expects loans to rise by a low-double-digit percentage this year, in large part because of continued strength in its mortgage business. Last year its loan book increased 13%, to $114.6 billion.
SunTrust last provided guidance for this year eight months ago, when it projected high-single-digit loan growth.
In his presentation, Mr. Chancy said deposits should increase by the middle single digits, compared with his company's previous guidance of a low- or mid-single-digit increase. Last year deposits rose 18%, to $122.1 billion.
Most of this year's increase will come from growth in certificates of deposit and money market accounts, he said.
SunTrust also said it expects net interest income to grow 5% to 7% this year. It had previously projected a mid-single-digit increase.
Last year its net interest income increased 24%, to $4.58 billion, in part because of the 2004 acquisition of National Commerce Financial Corp. of Memphis.
Shares of SunTrust rose 0.34% on Tuesday.
Last month SunTrust chairman and chief executive L. Phillip Humann said in an interview with American Banker that its mortgage business was benefiting from its effort to cross-sell more mortgage products to retail clients. He also said SunTrust had hired "hundreds" of loan officers and originators from rivals while opening more mortgage offices.
He also said that he was seeing no slowdown in loan demand. "We've had very balanced, strong loan growth, and we don't see it falling off anytime soon. The economy down here is actually pretty good."
SunTrust has been expanding its deposit-gathering operations by adopting National Commerce's in-store branching model. Last year SunTrust's in-store network grew 8.5%, to 456. A large portion of those branches were in Wal-Mart stores, where it now has 95 and plans 20 more.
This year SunTrust entered the Charleston, S.C., market by, among other things, opening branches in Bi-Lo grocery stores. In the first quarter it generated $5 million of deposits and $1 million of loans in Charleston.
On Tuesday the company forecast a stable net interest margin of 3.1% for the year. Previous guidance had called for the margin to end up between 3% and 3.1%. Last year the margin shrank 1 basis point, to 3.16%.
SunTrust said it expects noninterest expenses to rise 6% to 8% this year. Previous guidance had called for a mid-single-digit increase. Mr. Chancy said that expenses would be higher than his company previously thought, because of "volume-related expenses," but that better-than-expected credit quality would largely offset the expenses. Last year noninterest expenses rose 20%, to $4.69 billion.
During the interview last month, Mr. Humann said SunTrust's credit quality is solid because most of its loan growth "has been in the low-loss or no-loss categories." In turn, SunTrust has been able to maintain a lower loan-loss reserve than most other large banking companies, he said.
