STI 2018 Annual Report

68 BUSINESS SEGMENT RESULTS Year Ended December 31, 2018 versus 2017 Consumer Consumer reported net income of $1.5 billion for the year ended December 31, 2018, an increase of $516 million, or 55%, compared to 2017. The increase was driven primarily by higher net interest income and lower provisions for credit losses and income taxes, offset partially by lower noninterest income and higher noninterest expense. Net interest income was $4.2 billion, an increase of $329 million, or 8%, compared to 2017, driven by improved spreads on deposit balances. Net interest income related to deposits increased $322 million, or 14%, driven by a 25 basis point increase in deposit spreads and a $1.9 billion, or 2%, increase in average deposit balances. Deposit balance growth was driven by increases in commercial and consumer DDAs, checking, and CD balances, offset partially by lower money market account balances. Net interest income related to LHFI increased $27 million, or 2%, driven primarily by a $1.8 billion, or 3%, increase in average LHFI balances, offset partially by a two basis point decrease in loan spreads. Consumer loan growth was driven by increases in residential mortgages, consumer direct, indirect, and guaranteed student loans, offset partially by declines in home equity products and personal credit lines. Provision for credit losses was $148 million, a decrease of $218 million, or 60%, compared to 2017. The decrease was driven by lower net charge-offs, improved credit quality, and the release of hurricane-related ALLL reserves. Total noninterest income was $1.8 billion, a decrease of $101million, or 5%, compared to 2017. The decrease was driven primarily by lower mortgage related income and lower client transaction-related fee income (which includes service charges on deposit accounts, other charges and fees, and card fees), offset partially by increases in retail investment services and other noninterest income. The decline in client transaction-related fee income was due primarily to the impact of our adoption of the revenue recognition accounting standard on January 1, 2018 and by a change in our process for recognizing card rewards expenses in third quarter of 2018. Total noninterest expense was $4.0 billion, an increase of $35 million, or 1%, compared to the same period in 2017. The increase was driven primarily by higher outside processing and software costs due to investments in technology and process optimization during 2018 and by favorable developments with certain legal matters in the fourth quarter of 2017, offset partially by revenue recognition accounting impacts and branch network activity in the current period. Wholesale Wholesale reported net income of $1.5 billion for the year ended December 31, 2018, an increase of $303 million, or 24%, compared to 2017. The increase was due to lower provision for income taxes, higher net interest income, and lower noninterest expense, offset partially by lower noninterest income and higher provision for credit losses. Net interest income was $2.3 billion, an increase of $99 million, or 5%, compared to 2017, driven primarily by increases in loan volume and improved deposit and equity spreads, offset partially by lower loan spreads and declines in deposit volume. Net interest income related to deposits increased $112 million, or 14%, as a result of improved spreads, offset partially by decreased deposit volumes. Average deposit balances decreased $1.5 billion, or 3%, as a result of decreases in money market accounts and non-interest-bearing commercial DDAs, offset partially by increases in interest-bearing commercial DDAs and business CD products. Net interest income related to LHFI decreased $52 million, or 4%, as a result of lower tax exempt loan and lease spreads, which were specifically impacted by the 2017 Tax Act. Average LHFI increased $806 million, or 1%, primarily as a result of client activity in Commercial Real Estate. Net interest income related to equity increased $53 million, or 31%, due to higher equity balances and spreads. Provision for credit losses was $60 million, an increase of $21 million, or 54%, compared to 2017, driven primarily by increases in loan balances. Total noninterest income was $1.5 billion, a decrease of $39 million, or 2%, compared to 2017. The decrease was driven largely by lower investment banking income, which decreased $24 million, or 4%, as a result of lower loan syndication, investment grade bond, and high yield bond fees, offset partially by higher mergers and acquisitions and equity origination fees. Trading income was down $8 million, or 5%, as a result of lower client-related derivative activity. These decreases were offset partially by $30 million of remeasurement gains on an equity investment following our adoption of the recognition and measurement of financial assets accounting standard on January 1, 2018 and a $11 million, or 9%, increase in commercial real estate related income as a result of higher structured real estate gains. Total noninterest expense was $1.7 billion, a decrease of $7 million compared to 2017. The decrease was due to lower incentive related compensation, offset partially by higher investment banking transaction expenses related to the impact of our adoption of the revenue recognition accounting standard on January 1, 2018. Corporate Other Corporate Other net income was a net loss of $37 million for the year ended December 31, 2018, a decrease of $332 million compared to 2017. The decrease in net income was due primarily to lower net interest income. Net interest income was a net expense of $188 million, a decrease of $205 million compared to 2017. The decrease was driven primarily by lower commercial loan-related swap income due to higher benchmark interest rates. Average long-term debt increased $838 million, or 8%, and average short-term borrowings increased $949 million, or 50%, driven by balance sheet management activities. Total noninterest income was $57 million, a decrease of $16 million, or 22%, compared to 2017. The decrease was driven primarily by a decline in trading income, which decreased $21 million, or 91%. Total noninterest expense was a benefit of $42 million for the year ended December 31, 2018. The benefit increased $116 million compared to 2017. The increase was due primarily to a net occupancy credit triggered by the early termination of a tenant's lease and credits for excess cash reserves recognized in