Truist Financial (NYSE:TFC) will reportedly stop trading in mortgage-backed securities (MBS), government agency bonds, and Small Business Administration bonds by January next year. With regard to these changes, the bank is also said to have eliminated about 80 positions from its Atlanta and Memphis offices.
Truist is one of the major holders of agency MBS in midsize U.S. financial institutions, along with Charles Schwab (SCHW) and U.S. Bancorp. (USB). However, as interest rates increased, the prices of these bonds decreased, causing the bank to incur considerable unrealized losses.
In addition, prices were further driven down by the recent financial chaos brought on by the failure of Silicon Valley Bank and Signature Bank. The trading industry, meanwhile, has been struggling with difficult comparisons to the prior year, which benefited from the conflict between Russia and Ukraine.
As per Bloomberg, trading revenue for Wall Street’s five major banks, JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), and Morgan Stanley (MS), is expected to see a 10% decline to $29.9 billion in the first three months of 2023.
JPMorgan and Citigroup are scheduled to release their first-quarter results on April 14, before the market opens. Truist will release its Q1 numbers on April 20.
Is TFC Stock a Buy?
Overall, TFC stock is a Moderate Buy on TipRanks, based on six Buy and eight Hold recommendations. Analysts’ average price target of $47.46 implies 40.25% upside potential. Shares have tanked 21.6% so far in 2023.
