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SunTrust Banks expects $2.4B loss in mid-cycle stress test

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SunTrust Banks expects $2.4B loss in mid-cycle stress test

SunTrust Banks Inc. projected a pretax net income loss of $2.4 billion after nine quarters of a hypothetical severely adverse scenario of its company-run stress test.

The Atlanta-based company expected to record $4.0 billion in pre-provision net revenue and $6.4 billion in provisions. It also projected $5.2 billion in total loan losses, including $2.2 billion in its commercial and industrial loans. For the C&I book, the portfolio would have a loss rate of 4.8%.

The company's capital ratios are expected to exceed their regulatory minimum requirements. The company projected its common equity Tier 1 capital ratio declining to a minimum of 8.0%, its Tier 1 risk-based capital ratio hitting a 9.1% low, its total risk-based capital ratio falling to 11.3% and its Tier 1 leverage ratio dropping to 8.2%.

The mid-cycle stress test was required under the Dodd-Frank Act. The scenario covers the time period of July 1, 2017, through Sept. 30, 2019.