July 22 (Bloomberg) -- SunTrust Banks Inc. and Fifth Third Bancorp led U.S. regional banks higher in New York trading on earnings that beat analysts’ estimates as the U.S. economic rebound meant lenders could set aside less for loan losses.
SunTrust, based in Atlanta, jumped 9.6 percent after putting aside the lowest loss provision since 2008 and Cincinnati-based Fifth Third climbed 10 percent after reporting its first profit in a year. That made them the second- and third-best performing stocks in the Standard & Poor’s 500 Index.
The profit reports mirrored better-than-estimated earnings from the four largest U.S. banks during the past week. The six banks that reported today set aside 43 percent less to cover credit losses than they did a year earlier as the U.S. probably had its fourth quarter of GDP growth and added more than 600,000 jobs in the past three months.
“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.”
The KBW Bank Index gained 3.9 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. KeyCorp posted its first profit in more than two years as it cut its provision for loan losses by more than two-thirds from a year earlier.
SunTrust climbed $2.16 to $24.58 at 4 p.m. in New York Stock Exchange composite trading. KeyCorp increased 5.4 percent and PNC climbed 2.1 percent, while Huntington advanced 3.1 percent. BB&T fell 2.2 percent.
The banks had combined loan-loss provisions of $2.88 billion in the quarter, down from $5.03 billion a year earlier.
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 Department’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’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
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.
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