SunTrust, Fifth Third Lead U.S. Banks Higher on Profit Reports

SunTrust Banks Inc. and Fifth Third Bancorp led U.S. regional banks higher in New York trading on earnings that beat analysts’ estimates and lower loan-loss provisions.

The KBW Bank Index gained as much as 3.5 percent after Pittsburgh-based PNC Financial Services Group Inc. and BB&T Corp., based in Winston-Salem, North Carolina, said non- performing assets fell for the first time since 2006. Two Ohio banks, Fifth Third and KeyCorp, posted their first profits in at least four quarters as they cut provisions for loan losses by more than two-thirds from a year earlier.

The reports mirrored better-than-estimated earnings from the four largest U.S. banks during the past week. The six largest lenders that reported today set aside a combined $2.88 billion to cover loan losses, a 43 percent decrease from $5.03 billion a year earlier.

“The economy is still slow and sluggish, but it’s much better year-over-year,” said Stephen Steinour, chief executive officer of Huntington Bancshares Inc., which beat analysts’ estimates today with its second consecutive quarterly profit. “We actually expect credit quality to continue to improve through the second half. We’ve emerged out of a turnaround stage now.”

SunTrust climbed $1.27, or 5.7 percent, to $23.69 at 9:56 a.m. in New York Stock Exchange composite trading. Fifth Third jumped 6.5 percent, while KeyCorp increased 2.8 percent and PNC climbed 2.6 percent. Huntington advanced 4.6 percent. BB&T fell 5.6 percent.

Financial Overhaul

Several of the banks said revenue may be hurt by the financial-overhaul bill that President Barack Obama signed into law yesterday. The law, which the Senate passed last week after more than a year of negotiations, establishes an independent consumer protection agency and limits fees on credit and debit cards.

PNC’s second-quarter net income more than tripled to $803 million, or $1.47 a share, from $207 million, or 14 cents, in the same period a year earlier, the Pittsburgh-based bank said in a statement today. Twenty-seven analysts surveyed by Bloomberg had an average profit estimate of $1.27 a share.

Excluding dividends on preferred shares, including those held by the U.S. Treasury’s bailout fund, SunTrust reported a profit of $12 million and Fifth Third posted earnings of $192 million. Those figures compared with losses of $183 million and $10 million a year earlier, respectively.

KeyCorp Profit

KeyCorp’s net income was $70 million, or 3 cents a share, compared with a net loss of $394 million, or 68 cents, in the year-earlier period, the Cleveland-based lender said today in a statement. The average estimate of 24 analysts surveyed by Bloomberg was a loss of 11 cents.

BB&T posted earnings of $224 million, up from $208 million a year earlier. Huntington recorded $48.8 million in net income, or 3 cents a share, compared with a loss of $125 million, or 40 cents, a year earlier, the company said in a statement today.

Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. all beat estimates as they reduced the size of their loan-loss provisions, the companies said in the past week.

“The banking system showed with the numbers we just got that it has moved to a position of health,” Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York, said earlier this week. “The patient is fully recovered.”

BB&T said nonperforming assets decreased 3.1 percent, the first decline since the first quarter of 2006. At PNC, the sixth-largest U.S. bank by deposits, nonperforming loans dropped 8.3 percent from the first quarter to $5.28 billion, the first decline since the fourth quarter of 2006. Nonperforming assets fell by $465 million, or 7 percent, in the quarter to $6.1 billion.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net.

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