Truist Financial misses profit estimates as it braces for potential loan losses

April 20 (Reuters) - Truist Financial Corp reported a first-quarter profit that missed Wall Street estimates on Thursday, as the lender set aside rainy-day funds to cover for the contingency of its customers defaulting on their loans. The bank's shares, which have lost roughly 19% so far this year, were down 1.4% in premarket trading after results. Against the backdrop of turbulent economic forecasts, banks have raised their buffers for credit-loss provisions, expecting customers facing the brunt of high interest rates in an inflationary environment to miss on loan repayments.

The lender set aside $502 million in provisions for credit losses in the quarter due to increased economic uncertainty, compared with a reserve release of $95 million a year earlier. Meanwhile, average deposits in the first quarter came in at $408.5 billion, down 1.2% from the previous quarter, as customers chased higher-rate alternatives after the banking crisis in March shook faith in the industry's stability.

The bank's results come at a time when regional lenders are faced with the twin tasks of restoring customers' faith in the safety of their deposits and reassuring investors that there is no liquidity crunch. Truist earned $1.05 per share in the first quarter ended March 31, missing estimates of $1.14 per share, according to Refinitiv IBES data. The bank said net income available to common shareholders in the quarter was $1.41 billion, compared with $1.33 billion a year earlier. (Reporting by Manya Saini in Bengaluru; Editing by Pooja Desai)