UBS’ Best Stocks In The AI, Growth & Low Rates Era: Top 29 US Stocks

12. Truist Financial Corporation (NYSE:TFC)

Number of Hedge Fund Investors In Q2 2024: 42

UBS’ Sector Rating: Attractive

Sector: Financials

Truist Financial Corporation (NYSE:TFC) is an American regional bank headquartered in Charlotte, North Carolina. It caters to the needs of commercial and retail customers. The bank also has wealth management and insurance holding divisions. The diversified service lineup allows Truist Financial Corporation (NYSE:TFC) to hedge its income statement against varying economic conditions. Of particular note is the balance between wealth management and consumer banking. While the latter typically struggles in a high inflation and interest rate environment, the former is not affected as hard. The diversification was pushed to the forefront in Truist Financial Corporation’s (NYSE:TFC) financials for H1 2024. They saw the bank’s noninterest income take a $6.7 billion hit due to securities losses. However, this was balanced out by investment banking, wealth management, and other businesses as they stemmed the bleeding to a still remarkable $3.7 billion. Noninterest income will continue to play a key role in Truist Financial Corporation’s (NYSE:TFC) hypothesis as lower rates gradually reduce the banking sector’s interest income.

Truist Financial Corporation’s (NYSE:TFC) management shared its expectations for Q4 during the Q3 2024 investor call:

“Looking into the fourth quarter of 2024, we expect revenue to decrease 1.5% from the third quarter of 2024 adjusted revenue of $5.1 billion. We expect net interest income to decrease 1.5% in the fourth quarter, primarily driven by lower commercial loan balances and some pressure to our net interest margin due to the temporary lag in our deposit beta. Our net interest income outlook assumes two 25 basis point reductions in the federal funds rate over the remainder of 2024, one cut in November and another cut in December. We expect non-interest income to decline by 2%, driven primarily by lower investment banking and trading revenue as the third quarter performance was helped by some pull-forward of capital markets activity from the fourth into the third quarter.”