(Reuters) – Comerica Inc on Friday reported second-quarter profit above Wall Street estimates as high interest rates boosted the lender’s interest income, sending its shares up 4.5% in premarket trade.
Like several other banks, Comerica has also benefited from a rapid series of rate hikes by the U.S. Federal Reserve that boosted its net interest income (NII) – the difference between the interest earned on loans and payed out on deposits – to $621 million from $561 million a year ago.
Comerica’s profit came in at $2.01 per share, beating analysts’ estimates of $1.86, according to Refinitiv data.
However, the bank cut its 2023 NII growth forecast to a range of 1% to 2%, from 6% to 7% estimated earlier.
Regional banking peers Fifth Third Bancorp and Huntington Bancshares had also beaten profit estimates but cut their NII forecasts as sky-high borrowing costs threatened to hurt customer demand for loans in the near future.
Quarter-end average deposits at Comerica fell 5% to $64.33 billion sequentially. For the full year, the bank expects a drop of 14% to 15% from last year.
Following the collapse of three major banks and a massive deposit run earlier this year, U.S. lenders are trying improve their liquidity to boost investor confidence.
Last month, Comerica announced its exit from the mortgage banker finance business by the end of the year, in an effort to improve its loan-to-deposit ratio and capital efficiency.
(Reporting by Sri Hari N S in Bengaluru; Editing by Devika Syamnath)
