2023-09-11 12:08:01
(Adds industry detail and context in paragraphs 5-6, second quarter results details in paragraphs 7-9)
Sept 11 (Archyde.com) – Truist Financial Corp TFC.N plans “significant reductions” in its workforce between the third quarter of 2023 and the first quarter of next year to reduce costs, the bank revealed in a regulatory filing on Monday .
The layoffs, part of a broader cost-cutting program, are expected to save $300 million. With the optimization of technologies and the simplification of the organization, this program will save $750 million over a period of 12 to 18 months.
Truist, in an investor presentation, added that spending growth in 2024 will be significantly lower than in 2023.
The bank’s shares were slightly higher in pre-market trading. The stock is down about 30% year to date, through the previous close.
Banks, which typically thrive during periods of steady economic growth, face the possibility of a recession that could lead to struggling customers being saddled with credit card and mortgage debt.
The collapse of three U.S. lenders earlier this year triggered the sector’s biggest crisis since 2008 and precipitated the takeover of Credit Suisse by government-backed UBS Group UBSG.S . Although the turbulence has calmed in recent months, investors have remained cautious.
In July, Truist missed estimates (link) for second-quarter profit as the bank set aside more relief funds to cover potential defaults in a tough economy.
The bank’s average deposits also declined 2% sequentially as customers continued to look for higher yielding alternatives to achieve better returns. They fell 5.7% in the second quarter compared to the previous year.
In their previous quarter earnings reports, several U.S. regional lenders cut their forecasts for loan growth and net interest income as higher rates for a long time crush loan demand.
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