Regions Financial forecasts drop in 2024 interest income

Jan 19 (Reuters) - Regions Financial Corp said on Friday it expects its interest income for 2024 to decline, after posting a 44% drop in fourth-quarter profit.

Several lenders have started to warn of a hit to net interest income (NII) this year amid growing expectations of interest rate cuts by the U.S. Federal Reserve. Reduced rates can squeeze profitability through decreased earnings on loans and financial instruments.

Increased payouts on deposits amid higher-for-longer interest rate environment also pressured interest income at lenders.

Regions Financial expects NII, or the difference between what a bank earns on loans and pays out on deposits, for 2024 to be in the range of $4.7 billion to $4.8 billion. It reported NII of $5.32 billion in 2023.

It also expects NII for the first quarter to decline 3%-5% sequentially.

Its NII for the three months ended Dec. 31 fell 12.1% to $1.23 billion.

The lender's fourth-quarter profit was $0.39 per share, compared with $0.70 per share a year earlier.

Its average total deposits fell 5% to $126.41 billion.

(Reporting by Sri Hari N S in Bengaluru; Editing by Shilpi Majumdar)