On Friday, Truist Securities updated its financial model for M&T Bank (NYSE:MTB), leading to a slight increase in the price target and reaffirmation of a Buy rating. The adjustment comes after M&T Bank's fourth-quarter earnings report and the outlook for 2025, which were described as mixed but modestly positive by Truist Securities.
Analysts at Truist have increased their 2025 earnings per share (EPS) estimate for M&T Bank by 1% to $16.75 and the 2026 estimate by less than 1% to $18.87. This led to a revised price target of $236, up from the previous $233, based on the projected 2026 EPS and a next twelve months (NTM) multiple of 12.5 times. The key factors influencing these enhancements include expected growth in net interest income (NII) due to net interest margin (NIM) expansion, a slight increase in loan growth, stronger core fee income, and share buybacks.
The report from Truist Securities indicates that their NII is projected to grow by 4% year-over-year, fee income by 6%, and expenses by 2%, aligning with management's expectations. Loan and deposit growth for 2025 are estimated at 2% and 0%, respectively, which is consistent with the guidance provided by M&T Bank's management.
Truist also noted that their non-performing loan (NCO) ratio estimate for 2026 aligns with management's forecast at around 40 basis points. They anticipate building reserves again in 2025 as consumer credit continues to normalize, aiming to maintain a reserve ratio of over 1.50% into the second half of 2026.
Additionally, Truist's model includes $2.3 billion in share buybacks for 2025, which is above the current consensus of $1.9 billion, resulting in an expected Common Equity Tier 1 (CET1) ratio of 11.0% by the fourth quarter of 2025. According to InvestingPro, M&T Bank maintains a "GOOD" overall Financial Health Score, reflecting its solid financial position and robust capital management strategy.
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