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    TFC
    Earnings call· Mar 2026(Q1 FY26)

    TRUIST FINANCIAL CORP TFC

    Apr 17, 2026 Source

    Executive summary

    Truist Q1 FY26 — Strong Profitability and Elevated Capital Return Drive Long-Term ROTCE Target Increase

    Truist delivered a strong Q1 FY26, showcasing underlying momentum in client acquisition, fee-based businesses, and capital management. This performance, coupled with clarity on the evolving capital framework, led the company to establish a new long-term ROTCE target of 16-18%. Despite a revised NII outlook due to interest rate expectations, the company maintained its overall earnings expectations for 2026, driven by stronger noninterest income, increased share repurchases, and a lower effective tax rate.

    Highlights

    5

    • Net income available to common shareholders increased 25% year-over-year to $1.4 billion or $1.09 per diluted share.

    • Return on tangible common equity (ROTCE) improved by 150 basis points year-over-year to 13.8%.

    • Investment Banking and Trading delivered its highest quarterly revenue since 2021, growing 36% year-over-year.

    • Average loans held for investment increased $2.3 billion or 0.7% linked quarter, driven by 1.8% commercial loan growth.

    • Average deposits increased 0.7% linked quarter, despite being a seasonally weak period for deposit growth.

    Concerns

    4

    • Full-year 2026 Net Interest Income (NII) growth outlook revised down to 2-3% from 3-4% due to unchanged federal funds rate expectations.

    • Net Interest Margin (NIM) decreased by 5 basis points linked quarter to 3.02%.

    • Full-year 2026 GAAP noninterest expense growth outlook increased to approximately 1.75% from a prior range of 1.25-2.25%.

    • Net charge-offs increased 4 basis points linked quarter to 61 basis points.

    Guidance & targets

    15
    CategoryTargetConfidence
    Long-term ROTCE target
    16% to 18%
    high materiality
    High
    Full-year 2026 Net Interest Income (NII) growth
    2% to 3%
    high materiality
    Medium
    Full-year 2026 Noninterest Income growth
    high single-digit growth
    medium materiality
    High
    Full-year 2026 GAAP Noninterest Expense growth
    approximately 1.75%
    medium materiality
    Medium
    Full-year 2026 Net Charge-offs
    about 55 basis points
    medium materiality
    High
    Full-year 2026 Effective Tax Rate (GAAP)
    approximately 14.5%
    medium materiality
    High
    Full-year 2026 Effective Tax Rate (Taxable Equivalent)
    approximately 16.5%
    medium materiality
    High
    Full-year 2026 Share Repurchases
    $5 billion
    high materiality
    High
    Full-year 2026 ROTCE target
    14%
    high materiality
    High
    Full-year 2027 ROTCE target
    15%
    high materiality
    High
    Q2 2026 Revenue
    relatively stable
    medium materiality
    Medium
    Q2 2026 Net Interest Income (NII)
    increase approximately 1%
    medium materiality
    Medium
    Q2 2026 Noninterest Income
    decline approximately 1%
    medium materiality
    Medium
    Q2 2026 Noninterest Expense
    increase by 3% to 4%
    medium materiality
    Medium
    Q2 2026 Share Repurchases
    $1.2 billion
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Consumer and Small Business Banking (CSBB)
    Delivered a solid quarter consistent with strategy to drive profitability improvement. Average loans declined modestly linked quarter, consistent with normal seasonality and focus on risk-adjusted returns. Premier Banking was a source of strength with significant deposit and lending production. Digital continues to be a key growth engine, with increased new-to-bank clients and active users.
    Average consumer and small business deposits growth YoY: 1%Average consumer and small business loans growth YoY: 4%Premier Banking production: up significantlyDigital share of new-to-bank clients: 45%Gen Z and millennials in new-to-bank growth: >50%Active digital users growth: YoY
    		————
    Wholesale
    Delivered a strong start to 2026 with continued momentum across loans, deposits, and fees, while maintaining a disciplined focus on relationship returns and capital efficiency. Diversified growth across industry banking, middle market, and CRE teams. Strong fee performance in Wealth Management and Investment Banking and Trading, driven by increased connectivity across platforms.
    Average wholesale loans growth YoY: 9%Average wholesale deposits growth YoY: 2%Middle market deposits growth YoY: 11%Middle market deposits growth in legacy markets YoY: 7%Middle market deposits growth in expansion markets (Texas, Ohio, Pennsylvania) YoY: 30%Investment Banking and Trading revenue: highest since 2021
    		————

    Operational metrics

    11
    Effective tax rate (GAAP)
    12.4%vs 17.9% in Q1 FY25
    Q1 FY26

    Approximately half of the year-over-year decline was due to increased client transaction activity in the project finance business.

    Cumulative interest-bearing deposit beta
    46%up from 45% linked quarter
    Q1 FY26

    Increased on a linked-quarter basis.

    Total deposit beta
    31%up from 30% linked quarter
    Q1 FY26

    Increased on a linked-quarter basis.

    Average interest-bearing deposit costs
    2.09%down 14 basis points linked quarter
    Q1 FY26

    Declined on a linked-quarter basis.

    Average total deposit costs
    1.55%down 9 basis points linked quarter
    Q1 FY26

    Declined on a linked-quarter basis.

    ROA profile
    moving closer to 1.20%
    by 2027 outlook

    Expected to creep higher from there, contributing to the long-term ROTCE target.

    NDFI loans as percentage of total loans
    12%
    as of March 31

    This is a well-diversified portfolio structured with protections that have held up well historically in stressed environments.

    Private credit exposure (BDCs and middle-market loan funds) as percentage of loan portfolio
    1%
    as of March 31

    These facilities are designed to provide significant loss protection in stress scenarios.

    Basel III RWA decline estimate (standardized approach)
    9%
    under newly proposed capital rules

    Under the newly proposed capital rules, risk-weighted assets could decline by this amount.

    Basel III RWA decline estimate (ERBA)
    11%
    under newly proposed capital rules

    Under the newly proposed capital rules, risk-weighted assets could decline by this amount.

    Corporate and commercial banking teams new to platform
    23%
    current

    These teams have high productivity, leveraging the platform's capabilities and products.

    Industry KPIs

    13
    MetricValueDetails
    Loans$327 billionUSD
    Deposits—
    Rotce ROE13.8%%
    Cet1 ratio10.8%%
    Capital returns$1.1 billionUSD
    Fee income lines—
    Allowance reserves—
    Net interest income$105 million decreaseUSD
    Net interest margin3.02%%
    Net charge offs npls61 basis pointsbps
    Total operating expenses—
    Provision for credit losses—
    Efficiency ratio operating leverage250 basis pointsbps

    Risks & headwinds

    4
    Net Interest Income (NII) pressure from unchanged Fed funds rate expectationsFY26

    FY26 NII growth revised down to 2-3% from 3-4%

    Mitigation: Stronger noninterest income growth and increased share repurchases are expected to offset the NII pressure, maintaining overall earnings expectations.

    Competitive deposit environmentCurrent

    Yield-seeking behavior and product rotation observed; average interest-bearing deposit costs declined 14 bps QoQ to 2.09%, total deposit costs declined 9 bps QoQ to 1.55%.

    Mitigation: Focus on growing net-new clients, leveraging marketing tools, and emphasizing high-quality relationships in premier banking and wholesale segments to improve future profitability.

    Increase in reported consumer nonperforming loans (NPLs)Q1 FY26

    Consumer NPLs increased, contributing to a 2 bps QoQ rise in total NPLs held for investment to 50 bps.

    Mitigation: This increase is primarily due to a change in nonaccrual criteria for certain indirect auto loans, as disclosed in the 10-K, rather than a deterioration in underlying credit trends. No impact to cash flows or loss expectations.

    Tight credit spreadsCurrent

    Credit spreads have remained relatively tight despite market conditions.

    Mitigation: Management hopes for some expansion of margin on the credit side in the future. Focus on higher-returning, more fulsome relationships in commercial and corporate banking.

    What to watch in Q2 FY26

    5

    NII Growth Trajectory

    next quarter
    CurrentQ1 FY26 NII decreased 2.8% QoQ; FY26 guidance 2-3% growth
    TargetQ2 FY26 NII increase ~1%

    Why it matters

    NII is a primary driver of bank profitability, and its trajectory will indicate the impact of interest rate expectations and competitive pressures.

    We expect net interest income to increase approximately 1% in the second quarter primarily driven by an additional day and increased client deposit balances.

    Q&A highlights

    6

    Can you provide context on the rationalized NII outlook for the year, specifically how the lack of Fed rate cuts impacts it, and comment on the competitive deposit environment?

    The NII outlook revision is due to the company being liability-sensitive on the short end and the removal of two expected Fed rate cuts from the outlook. The deposit environment is competitive, with clients seeking yield and product rotation. Strong fee momentum is helping to offset NII pressure, allowing the company to maintain its overall earnings expectations.

    “We're positioned liability sensitive on the short end. And so saw a little bit of pressure there that came through. And frankly, the second part of your question is probably the other contributing factor, which is it is competitive.”

    asked by Robert Siefers · answered by Michael Maguire

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Execution and Underlying Momentum

    Truist is demonstrating strong underlying momentum, with growing new client pipelines and healthy activity levels across the company. The firm is actively adding talent and executing in key areas to drive profitability improvement, resulting in growth in consumer and wholesale loans, robust fee growth from core client activity, and enhanced internal connectivity. This disciplined focus on capital allocation, pricing, productivity, and digital execution is translating into strong performance and positions the company well for the remainder of the year.

    02

    Project Finance Business and Tax Provision Impact

    The project finance business, a client-focused platform providing financial advice and capital for infrastructure development, significantly contributed to Truist's Q1 FY26 results. A meaningful portion of its benefit is realized through reductions to the tax provision rather than reported revenue. This dynamic contributed to a lower effective tax rate of 12.4% in the first quarter and is a factor in the expected lower tax rate for 2026 compared to 2025, demonstrating how client service drives strong financial outcomes.

    03

    AI Adoption for Productivity and Client Engagement

    Truist is increasingly leveraging Artificial Intelligence (AI) as a key operating lever to enhance productivity, decision-making, and client engagement. In Consumer and Small Business Banking, AI is deployed through Truist Insights for personalized financial guidance, Truist Assist for routine service requests, and AI-enabled call summarization for care center agents. In Wholesale, AI uses predictive analytics to improve adviser effectiveness, accelerate underwriting speed and precision, and scale lead generation and conversion, ultimately improving returns and speed to market.

    04

    Wholesale Segment Performance and Connectivity

    The Wholesale segment delivered a strong start to 2026, with diversified growth in average loans (up 9% YoY) and deposits (up 2% YoY) across industry banking, middle market, and CRE teams. Middle market deposits, a key investment area, grew 11% year-over-year, including 30% growth in expansion markets. Fee performance was a standout, with Investment Banking and Trading achieving its highest quarterly revenue since 2021 and strong results in Wealth Management. Enhanced connectivity among commercial, corporate, and investment banking platforms is driving higher quality fee growth and meaningful contributions from existing clients.

    05

    Basel III Proposal and Capital Management

    Truist is well-positioned for the recently issued Basel III proposal, with estimated risk-weighted asset (RWA) declines of 9% under the revised standardized approach and 11% under ERBA. Management believes these proposed changes align well with their lending strategies and support continued elevated capital return to shareholders. The clarity on the evolving capital framework contributed to the decision to establish a new long-term ROTCE target, reinforcing confidence in the business's ability to deploy capital effectively.

    AI-generated summary of the company’s earnings call. Not investment advice.