M&T Bank Corporation reported a year-over-year increase of 4% in its Q3 2023 revenues, reaching $2.34 billion, and beating the consensus estimate of $2.32 billion. The bank's net operating earnings per share for the quarter stood at $4.05, surpassing the Zacks Consensus Estimate and up from $3.83 in Q3 2022.
On Wednesday, M&T Bank stated that higher rates contributed to a growth in net interest income (NII), which rose by 5.8% to $1.79 billion due to an expanded net interest margin (NIM) of 3.79%. Meanwhile, expenses, including salaries and employee benefits, and the amortization of core deposit, decreased.
The bank also faced challenges such as a drop in non-interest income, including trust income, which fell slightly to $560 million. Provisions also increased, with a notable credit loss provision of $150 million.
Non-interest expenses saw a decrease to $1.27 billion, leading to a slight rise in the bank's efficiency ratio to 53.7%. As of September 30, 2023, loans and leases were reported at $132.6 billion while total deposits grew by 1.3% to $164.1 billion.
Credit quality showed mixed results for M&T Bank during Q3 2023. Net charge-offs increased to $96 million while non-performing assets declined by 3.5% to $2.37 billion. The ratio of non-accrual loans to total net loans decreased from 1.89% to 1.77%.
M&T Bank's capital position remained strong in Q3 2023 with an estimated Common Equity Tier 1 ratio of 10.94%, up from 10.75% in Q3 2022. The tangible equity per share rose to $93.99 from $84.28 in the same quarter last year. The bank's return on average tangible assets and average tangible common shareholder equity were slightly lower at 1.41% and 17.41%, respectively.
According to InvestingPro data, the bank's market cap stands at $20.13B USD, and it is trading at a low P/E ratio of 7.15, which, as per InvestingPro Tips, suggests a low earnings multiple. This aligns with the fact that M&T Bank has high earnings quality, with free cash flow exceeding net income.
M&T Bank's management has been aggressively buying back shares, a sign of their confidence in the company's future prospects. Furthermore, the bank has raised its dividend for 6 consecutive years and has maintained dividend payments for 45 consecutive years, indicating a strong commitment to returning value to shareholders.
The revenue growth of M&T Bank has been accelerating, with an impressive growth rate of 49.74% according to the InvestingPro data, which also reveals that 6 analysts have revised their earnings upwards for the upcoming period.
With an InvestingPro fair value of $189.59 USD, M&T Bank's stock seems to be undervalued at the current price of $124.39 USD, providing a potentially attractive entry point for investors.
For more insights and tips, you can explore InvestingPro's platform here. Among the numerous tips available, the two most relevant to M&T Bank have been highlighted above.
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