Regions Financial tweaks 2025 outlook, sees US slowdown

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Regions Financial adjusted its 2025 outlook as the parent company of Regions Bank expects a slowdown in the U.S. economy but not a recession.

Regions had initially expected revenue growth of about 3.3% this year. On Thursday, the company lowered that target to 2.3%.

"With respect to 2025 our outlook for unemployment has increased, and there is an expectation for a pronounced slowdown in GDP growth. But presently, our base case does not include a recession," Chairman, President and CEO John Turner said in the earnings call. "The current conditions have created uncertainty, which has caused many of our clients to delay investments."

Regions posted $1.78 billion in revenue for the first quarter of this year, up 2.1% from a year ago but below the $1.83 billion that analysts polled by S&P had expected.

Net interest income rose 0.8% from a year ago, while noninterest income gained 4.8%. A 12% drop in capital markets income weighed on noninterest income. Capital markets income also fell from the fourth quarter, which Regions attributed to "lower M&A advisory income, real estate related income and syndication revenue."

Regions adjusted its full-year net interest income expectations down from the 2-5% growth rate it had forecast at the end of the previous quarter but is hopeful for the latter part of the year.

"2025 net interest income is now projected to grow between one and four percent, with a reduction in the range driven by the evolving macroeconomic and interest rate environment," CFO David Turner said in the earnings call. "While only a small amount of loan growth from here is necessary to support the midpoint of our guidance, the potential for accelerating growth later in the year provides an opportunity to achieve the higher end of the range."

An economic slowdown is likely to put a crimp in Regions' plans to grow its commercial loan portfolio. The company had predicted in January that consumers and property owners might not borrow as much, but businesses would seek loans amid the lower taxes and lighter regulation the Trump administration was expected to bring.

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In the first quarter, average commercial and industrial loans fell 1.8% from a year ago to $49.21 billion. Average residential first mortgage, home equity and consumer loans all fell. Total average loans fell 1.3% to $96.12 billion.

"Although pipelines and commitments continue to trend higher versus this time last year, it is too early to assess the full impact tariffs will ultimately have on loan demand," David Turner said in the call. "Customers are delaying investment decisions pending further clarity."

The company now expects average loans this year to be relatively stable instead of growing about 1%, while average deposits are likely to be stable to modestly higher, compared with its previous forecast of relatively stable. Average deposits in the first quarter totaled $127.69 billion, up 0.4% from a year ago.

The company reported $490 million in net income for the first quarter of 2025, an increase from $368 million in net income a year ago.

The company also reported diluted earnings per share of 51 cents, which lined up with analyst estimates and increased 38% from 37 cents per share a year ago.

Regions Bank invested in its tech strategy through an open banking partnership at the beginning of the quarter but could face a one-time expense increase through losing a pending patent lawsuit with USAA regarding the use of mobile deposit capture technology. The company didn't comment on either development during the earnings call.