Regions Financial swings to a loss in Q2 as the Coronavirus pandemic fuels credit losses

Regions Financial Corp (NYSE: RF) published its quarterly financial results on Friday that highlighted the company to have swung to a loss in the second quarter. The company attributed its dovish performance to the Coronavirus pandemic that fuelled loan losses in recent months. Europe’s Nordea Bank also reported a 66% decline in operating profit in Q2.

Shares of the company were reported 3.6% down in premarket trading on Friday and tanked another 3% on market open. At £8.21 per share, Regions Financial Corp is currently 40% down year to date in the stock market after recovering from an even lower £5.87 per share in mid-March when the impact of COVID-19 was at its peak. Learn more about how to invest in the stock market.

Regions Financial prints a 7.6% growth in revenue in Q2

The American bank holding company registered £189.17 million in loss in the second quarter that translates to 19.95 pence per share. In the same quarter last year, it had recorded a net income of £298.52 million or 29.53 pence per share. According to FactSet, experts had forecast the company to print 3.99 pence of earnings per share in Q2. Regions released combined 2019 annual review in the last week of June.

In terms of revenue, the Birmingham-based firm saw a 7.6% growth on a year over year basis to £1.24 billion. Its net interest income came in at £786.21 million in the second quarter that represents a 3% annualised increase and tops analysts’ estimates of £773.84 million. Regions’ noninterest income, on the other hand, posted a broader 16% increase to £457.36 million in Q2 that also was reported stronger than the FactSet consensus of £390.79 million.

According to Regions Financial, its net interest margin contracted from 3.45% in the comparable quarter of last year to 3.19% in the recently ended Q2 that also missed the analysts’ estimate of 3.26%.

Regions Financial values loan loss provisions at £703.99 million

Experts had forecast the bank’s loan loss provisions to come in at £410.42 million versus a much higher £703.99 million that Regions’ noted on Friday. In the second quarter of last year, its credit loss provisions were valued at only £73.43 million.

Lastly, the company announced its COVID-19 related costs to have surged from £3.19 million in Q1 to £15.17 million in the second quarter.

Regions Financial’s performance in the stock market was reported fairly upbeat in 2019 with an annual gain of roughly 20%. At the time of writing, it is valued at £7.89 billion and has a price to earnings ratio of 8.04.