Financial services company Comerica Inc. (CMA: Quote) reported Wednesday a 34.7 percent increase in fourth-quarter profit, above Wall Street analysts’ estimates with higher non-interest income and good expense control, despite a decline in net-interest income and margin. Citing the current slow growing economic environment, the company said it expects to record lower net interest income in fiscal 2013, but an increase in customer-driven noninterest income.
For the fourth quarter, net income attributable to common shares was $128 million, higher than $95 million in the same period last year. Net income grew 11 percent sequentially, attributed to loan and fee income growth combined with expense control.
Net income attributable to common shares increased to $128 million or $0.68 per share from $95 million or $0.48 per share in the same period last year.
On average, 31 analysts polled by Thomson Reuters expected the company to earn $0.65 per share for the quarter. Analysts’ estimates typically exclude special items.
During the quarter, both business bank and wealth management segments performed well partly offset by lower profit from retail bank segment. For the quarter, net-interest income, meanwhile, declined to $424 million from $444 million last year. Net interest margin was 2.87 percent, lower than 3.19 percent last year.
Non-interest income totaled $204 million, 3.5 percent higher than last year primarily due to increases in customer-driven categories. Noninterest expenses expenses declined 10.9 percent to $427 million. Provision for credit losses also declined 11 percent to $16 million.
Average total deposits increased primarily reflecting an increase in noninterest-bearing deposits.
Chairman and Chief Executive Officer Ralph Babb Jr. said, “In this slow growing national economy, we continue to benefit from our position in growth markets and industry expertise, which helped drive an increase in average total loans of $522 million, primarily reflecting an increase of $762 million, or 3 percent, in commercial loans. We continue to capitalize on opportunities by allocating resources to faster growing markets and segments.”
The company added that its credit quality continued to be strong and capital position remains a source of strength to support its growth.
For fiscal 2012, the company’s net income climbed 33 percent from last year to $521 million or $2.67 per share, while analysts were looking for earnings of $2.66 per share. Net interest income increased 5 percent primarily due to an increase in average earning assets.
Looking ahead, Comerica projects stable provision for credit losses, and lower noninterest expense reflecting further cost savings due to tight expense control and no restructuring expenses.
Comerica also sees continued growth in average loans at a slower pace, with economic uncertainty impacting demand and a continued focus on maintaining pricing and structure discipline in a competitive environment.
Babb Jr. added, “Looking ahead, we believe our focus on relationships, growth markets, industry expertise and expense management should assist us in increasing returns to shareholders and provide us the momentum that will not only carry us through an extended low-rate environment, but enable us to succeed in it, too.”
Comerica closed Tuesday’s regular trading session at $31.87, up $0.15 or 0.47 percent.
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by RTT Staff Writer
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