Comerica Revises Fourth Quarter Outlook Citing Decline in Loans and FDIC Fees By Investing.com

© Reuters.

Comerica Incorporated (NYSE:) updated its fourth-quarter forecast, indicating average loans declined to $53 billion from $54 billion in the previous quarter. This decline was due to decreased activity in certain sectors, partially offset by increases in other sectors. The bank also observed a slight decline in average deposits to $65.8 billion, with notable changes across deposit types.

Despite these changes and the Fed’s aggressive interest rate policy increasing funding costs, Comerica is maintaining its net interest income (NII) outlook stable. The bank expects NII to decline by approximately 5-6%, but expects this to be balanced by a strong loan pipeline supporting 7% loan growth in 2023.

The bank’s loan growth has been steady at a five-year compound annual growth rate (CAGR) of 0.9%. Additionally, NII has experienced solid growth with a three-year CAGR of 13.6% and is expected to grow another 1-2% this year.

A significant factor affecting the bank’s costs is the Federal Deposit Insurance Corporation (FDIC) special assessment of $109 million in the fourth quarter, which will contribute to an approximately 3% increase in non-interest expenses.

This article was sponsored by AI and reviewed by an editor. Please see our T&Cs for more details.