M&T Bank CFO guides taxable NII to grow 20%-23%

M&T Bank CFO Darren King said during the company’s Q1 earnings call, according to a transcript: "First, let’s talk about net interest income outlook. The outlook for interest rates in the economy continues to change frequently. Since March 8, the 10-year U.S. government bond yield has dropped 46 basis points and the forward curve has changed meaningfully as well. We expect taxable net interest income to grow in the 20% to 23% range when compared to the $5.86B during 2022. This range reflects different rates of deposit balance growth, deposit pricing and loan growth. Consistent with the current forward curve, our forecast incorporates two 25 basis point cuts in the final quarter of this year. As we noted on the first quarter call, a key driver of net interest income in 2023 will be the ability to efficiently fund earning asset growth. We expect continued intense competition for deposits in the face of industry-wide outflows. Full year average total deposit balances are expected to be down low single digits compared to the $158.5 billion average during 2022… We expect 2023 noninterest income growth to be in the 7% to 9% range compared to the $2.23B in 2022. This outlook for noninterest income includes the impact of a bulk purchase of residential mortgage servicing rights that we completed at the end of this year’s first quarter. Turning to expenses. We anticipate expenses, excluding merger-related costs, the charitable contribution and intangible amortization to be up 11% to 13% when compared to the $4.52B during 2022. Recall that approximately half of this increase reflects an extra quarter of People’s United expenses. In addition, this outlook for net operating expenses includes the impact of the previously noted mortgage servicing rights purchase. We do not anticipate incurring any material merger-related costs in 2023 and and intangible amortization is expected to be in the $60M to $65M range during 2023. Turning to credit. We expect credit losses to migrate towards M&T’s long-term average of 33 basis points, although the quarterly cadence could be lumpy. Provision expense over the year will follow the CECL methodology and will be affected by changes in the macroeconomic outlook as well as loan balances… Finally, turning to capital. M&T’s common equity Tier 1 ratio of 10.15% at March 31, 2023, comfortably exceeds the required regulatory minimum threshold, which takes into account our stress capital buffer or SCB. We believe the current level of core capital exceeds that needed to safely run the company and to support lending in our communities. We plan to return excess capital to shareholders at a measured pace over the long term. However, in the near term, we plan to maintain a CET1 ratio slightly above the current level until the current economic uncertainty abates."