US IG FINANCIALS: Regions Financial 4Q25 (RF)
Credit neutral, with NII and NIM rising while loans flat on managed runoff of leveraged loans, while general commitments projects modestly rising loan growth. Asset quality metrics healthy.
(MTB; Baa1/BBB+/A-)
- Revs $.192B
- NII +2% QQ to $1.3B, NIM 3.7% up 11bps QQ
- NCO 0.59% up 10bps YY
- Non interest income $640MM down 3% on Capital Markest decline (lower loan syndication, commercial swaps impacted by govt shutdown), offset partially by Wealth Management fees
- ROTCE 17.17%, CET1 10.8%
- EPS $0.58
- Loans flatish to down, with modest growth offset by $1.4B of continued strategic runoff in leveraged loans; loans pipelines and commitments, however, rose YY.
- Outlook 2026: NII +2.5-4%, low single digit loan growth, NIM to tick up, assuming US 10Y ~4.1% and zero to 3 rate FFR cuts, ~30-35% deposit beta, non-inerest income +3-5%, NCO 0.40-0.50%
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EUROPEAN INFLATION: Slightly Dovish Details In Underlying and Breadth Metrics
There were slightly dovish developments in Eurozone underlying inflation and inflation breadth metrics in November. While not likely to change the narrative ahead of tomorrow’s decision, these metrics will be worth monitoring over the coming months, as the ECB decides what degree of (expected) inflation undershoot it is willing to tolerate at the current policy setting.
- The headline PCCI series (staff’s preferred measure of medium-term inflation pressures) was essentially unchanged at 2.04% Y/Y (vs 2.06% prior), while core-PCCI fell a little to 1.95% (vs 1.99% prior)
- The weighed median measure fell a notable four tenths to 2.4% Y/Y (vs 2.8% prior), matching August’s reading.
- Supercore was steady at 2.5% for the fifth consecutive month, while the 10% trimmed mean was unchanged at 2.2%. The 30% trimmed mean rose a tenth to 2.3%.
We estimate the proportion of ECOICOP subcomponents with inflation rates below 1% rose to 42% in November, up from 37% in October. That’s the largest proportion since June 2021.
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