Regions Financial saw loan demand remain soft in the fourth quarter as customers continued to be cautious.
Average and ending loans decreased “modestly” compared to the previous quarter, according to a presentation released Friday (Jan. 19) in conjunction with the bank’s quarterly earnings call.
In the bank’s business portfolio, average business loans declined 1% quarter over quarter, according to the presentation.
“We are seeing clients make long-term investments when they have to, but if they can defer, they’re holding off,” David J. Turner Jr., senior executive vice president and chief financial officer at Regions Financial, said Friday during the earnings call. “In general, sentiment varies across industries with some continuing to expect growth while others have a more muted outlook.”
Clients are remaining reluctant to initiate longer-term investments due to increases in interest rates, the cost of goods and the cost of labor, John M. Turner Jr., president and CEO at Regions Financial, said during the call.
Uncertainty around the economy, geopolitical conditions and the U.S. political environment have also contributed to their caution, he added.
“Borrowers are, I believe, more optimistic today than they were 60 to 90 days ago — and that’s in line with what appear to be improving economic conditions — but still reluctant to initiate long-term investments currently,” John Turner said.
Consumer loans remained relatively flat during the quarter, according to the presentation. Regions Financial saw growth in mortgage and EnerBank partially offset by declines in home equity and the bank’s completion of its GreenSky exit portfolio sale, David Turner said during the call.
“Looking forward, we expect 2024 average loan growth to be in the low-single-digits,” compared to 2023, David Turner said.
Regions Financial expects economic activity to pick up during the second half of 2024, with both business lending and, on the consumer side, mortgage and EnerBank lending increasing, John Turner said during the call.
“Any growth we have will be modest, and that will occur likely towards the back half of the year,” John Turner said.