Loan Growth Boosts Truist's NII in 1H25: Is the Upside Sustainable?

Truist Financial TFC, one of the largest regional banks in the United States, is witnessing steady loan growth. As of June 30, 2025, the lender had $312.6 billion in average loans and leases held for investment, a rise of 2% on a year-over-year basis. As the average loan balance improved, it led to higher average earning assets for TFC in the first six months of 2025. Though the yield on the average total loan portfolio of 5.99% declined 42 basis points (bps) from the prior-year period following interest rate cuts in the latter part of 2024, this was more than offset by lower average cost of interest-bearing deposits (down 37 bps) and average cost of short-term borrowings (down 112 bps).As such, Truist’s net interest income (NII) of $7.09 billion in the first half of 2025 witnessed 3% year-over-year growth. Likewise, net interest margin improved 7 bps to 3.02%. Management is optimistic about the NII growth trajectory in 2025. The company expects NII to increase approximately 3% this year on the assumptions of low single-digit average loan growth and reductions in the Fed funds rate later in the year. Also, Truist plans to reprice roughly $27 billion of fixed-rate loans and investment securities in the second half of 2025, with new fixed-rate loans likely to have a run-on rate around 7% compared with a current run-off rate of nearly 6.4%.Hence, Truist expects modest loan growth, favorable loan repricing and strategic balance sheet management to offset Fed rate cuts, with higher loan yields and extra revenue days boosting NII in 2025. We expect NII to grow 2.8%, 3.1% and 4.5% in 2025, 2026 and 2027, respectively. Our estimates for total loans indicate a compound annual growth rate (CAGR) of 3.8% 2027. Further, in 2025, 2026 and 2027, we project NIM to be 3.05%, 3.14% and 3.25%, respectively.How are Truist’s Peers Faring in Terms of Loan Growth & NII?PNC Financial PNC benefits from a decent lending scenario. Total loans have witnessed a five-year (2019-2024) CAGR of 5.6%, with momentum continuing in the first half of 2025. The expectation of interest rate cuts in 2025 is likely to influence loan demand positively in the forthcoming period.Driven by decent loan growth, PNC Financial’s NII witnessed a five-year (ended 2024) CAGR of 6.3%, with a rising trend continuing in the first six months of 2025. Loan repricing, modest loan growth and stabilizing funding costs are expected to boost PNC Financial’s NII in 2025, with management projecting a 7% rise in the same this year.U.S. Bancorp USB has experienced strong growth in total loans during the past few years as it continued to expand and deepen relationships with current customers and acquire new customers and market share. The company’s total loans recorded a five-year (2019-2024) CAGR of 5.1%, with the trend continuing in the first six months of 2025. Going forward, the strengthening of loan pipelines in the commercial and credit card space is likely to drive loan growth. On the back of loan growth, U.S. Bancorp’s NII witnessed a five-year CAGR of 4.4% through 2019-2024, with a rising trend continuing in the first half of 2025. Investment portfolio repositioning, stabilizing funding costs and less deposit migration will drive U.S. Bancorp’s NII expansion in the quarters ahead.Truist’s Price Performance & Zacks RankShares of Truist have risen 1.8% this year, underperforming the industry’s growth of 6.7%. Image Source: Zacks Investment ResearchTFC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report U.S. Bancorp (USB): Free Stock Analysis Report Truist Financial Corporation (TFC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks