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(Reuters) - U.S. regional bank Regions Financial reported a 38% increase in fourth-quarter profit on Friday, driven by higher fees from advising on deals and fewer provisions for potentially souring loans in a tough economy.
Banks have benefited from a resurgence in dealmaking activity, fueled by improving economic confidence and greater political certainty. Expectations of more rate cuts and business-friendly regulations under President-elect Donald Trump have further boosted hopes for a continued revival in investment banking.
Regions Financial's capital markets income more than doubled in the quarter, driven by higher dealmaking fees, while wealth management income rose 7.7%.
These gains mirror trends seen by larger rivals, benefiting from a rebound of investment banking activity.
Interest rate cuts are also expected to boost loan demand and alleviate consumer stress, allowing lenders to reduce cash reserves set aside for potential defaults.
The bank's provision for credit losses, or the capital lenders set aside for loans that may not be paid back, decreased to $120 million in the quarter from $155 million in the year-ago period.
The Birmingham, Alabama-based lender's net interest income (NII) - the difference between what banks pay customers on deposits and earn as interest on loans - remained flat at $1.23 billion.
While it forecast that NII will decline modestly in the first quarter versus the fourth quarter, the bank expects it to grow between 2% and 5% in 2025.
Regions Financial's net income available to common shareholders rose to $508 million, or 56 cents per share, in the three months ended Dec. 31, from $367 million, or 39 cents per share, a year earlier.
Shares of the lender were last up 1.3% before the bell. Its stock ended 2024 with a 21.4% gain.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Maju Samuel)