M&T Bank's profit jumps on shrinking provisions, fee income strength
Oct 17 (Reuters) -M&T Bank MTB.N reported a jump in third-quarter profit on Thursday, helped by a rise in fees from institutional services and wealth management businesses and as the lender set aside less money to cover potential bad loans.
With the U.S. Federal Reserve finally joining the global rate-cutting cycle, regional lenders are poised to benefit as lower interest rates will help dissipate the commercial real estate overhang on the banking industry.
M&T's provision for credit losses fell to $120 million in the quarter from $150 million a year earlier, thanks to lower levels of criticized commercial real estate and commercial and industrial loans, the bank said.
Criticized loans are those that are deemed to have an elevated level of credit risk.
M&T's fees from institutional services and wealth management businesses rose $15 million to $170 million in the reported quarter from a year ago, thanks to robust capital markets.
Meanwhile, M&T's net interest income (NII) - the difference between what banks pay customers on deposits and earn as interest on loans - fell about 2.8% to $1.73 billion in the quarter from a year earlier.
Banks have been paying out higher rates on deposits to prevent customers from moving to rivals or higher-yielding alternatives such as money market funds.
Net income available to common shareholders rose to $674 million, or $4.02 per share, in the three months ended Sept. 30, from $664 million, or $3.98 per share, a year earlier.
M&T expects NII of $1.73 billion plus in the fourth quarter, in-line with Wall Street expectations. The forecast factors in two 25-basis-point rate cuts by the Fed.
The bank said the NII range is primarily dependent on deposits trends and loan growth in the fourth quarter.
M&T shares have gained 38% so far this year as of last close, outperforming the 22.5% jump in the benchmark S&P 500 .SPX index.
Reporting by Atharva Singh and Arasu Kannagi Basil in Bengaluru; Editing by Shailesh Kuber
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