April 21 (Reuters) - Regions Financial Corp (RF.N) first-quarter profit rose less than expected as the bank set aside more capital to withstand potential loan losses, which countered the gains from higher interest rates.
Rate hikes by the Federal Reserve have squeezed borrowers, and banks have been preparing for more of them to fall behind on loan repayments even as fears of the economy sliding into a deep recession have somewhat eased in the past few months.
The collapse of two lenders last month after a flight of deposits, has also shaken markets.
Regional Financial set aside $135 million as provision for credit losses, compared to a benefit of $36 million in the previous year.
That offset gains from a 40% growth in net interest income, the difference between how much banks earn from loans and pay out on deposits.
Total deposits fell 3% from the end of last year to $129.04 billion, but remained stable from early March through the end of the quarter, Regions said.
The bank posted a 12% jump in profit to $588 million, or 62 cents per share, for the three months ended March 31, missing analysts' estimates of 66 cents per share, according to Refinitiv.
