ATLANTA - SunTrust Banks Inc., the first of the 10 biggest U.S. banks to report first-quarter results, said yesterday that its net income climbed 8 percent as it cut bad loans and curbed expenses.
The company's shares recorded their biggest advance in almost three years as net income rose to $327.8 million, or $1.17 a share, from $304.9 million, or $1.06 a share, a year earlier, the company said. Revenue slid about 1 percent.
SunTrust's earnings gain helped send bank stocks higher because they signaled loan defaults are ebbing, investors said. Losses from bankrupt companies including Enron Corp., WorldCom Inc. and UAL Corp. have crimped lenders' profits the past year.
SunTrust, the ninth-biggest bank by assets, set aside half as much for bad loans as a year ago, cutting the provision to $80.8 million from $163.6 million.
Shares of SunTrust climbed $3.52 to $55.08 on the New York Stock Exchange yesterday. The 6.8 percent gain was their biggest since July 3, 2000.
SunTrust's profit exceeded by 1 cent per share the average estimate of analysts surveyed by Thomson First Call.
The bank held expenses relatively flat at $818.2 million, after they'd risen 5.8 percent in the fourth quarter. Containing costs was important because revenue was little changed in what Chief Executive Officer L. Phillip Humann called "a still-slow economy."
The bank eliminated 211 jobs in the first quarter and more than 2,100 during the past year, mainly through attrition, Chief Financial Officer John Spiegel told investors and analysts on a conference call. It had 27,662 employees at the end of 2002.
In December, the bank froze pay and eliminated 2002 bonuses for Humann, 57, and other executives to cut costs.
First-quarter revenue fell 0.72 percent to $1.38 billion as fee income fell 7.3 percent to $547.7 million. Lending income rose 3.1 percent.
SunTrust wrote off $79.8 million in loans in the first quarter, down from $118.6 million a year earlier. It was the fourth consecutive quarter of declining charge-offs.
Loans increased by 4.8 percent to $73 billion, spurred by a 38 percent rise in credit-card loans. Other consumer loans fell by 16 percent while commercial lending was relatively flat. Deposits climbed by 8.4 percent to $67.5 billion.