Truist Financial will make “sizeable reductions” in its workforce from the third quarter through the first quarter of 2024.
This is part of an effort to take out costs and lower expense growth, the financial services bank said in a presentation posted on its website Monday (Sept. 11). Truist is among the top 10 U.S. commercial banks.
Truist will make the workforce reductions by consolidating similar functions, implementing select business restructuring and undertaking geographic simplification, according to the presentation. The cost-cutting efforts will also include organizational alignment and simplification, and rationalizing technology spend.
The company, which is the third-largest U.S. regional bank, aims to reduce expenses by $750 million in the coming months, Bloomberg reported Monday. The Charlotte-based firm aims to curtail expense growth to just 1% by 2024, in stark contrast to the projected 7% growth for this year.
The anticipated job cuts are expected to result in savings of around $300 million, according to the report.
To further reduce costs, Truist plans to invest in upgrading its underlying technology, which is estimated to save the company an additional $200 million over the next 12 to 18 months. Additionally, the bank intends to restructure and consolidate certain businesses, including streamlining its branch network to improve efficiency, with the goal of achieving $250 million in savings.
Truist CEO Bill Rogers has acknowledged the company’s underperformance and expressed a firm commitment to enhancing its financial performance, the report said.
Investors have been expressing concerns about Truist’s expense discipline, leading to a 30% decline in the company’s shares this year, outpacing the decline of the KBW Bank Index by 10%, per the report. The projected 7% increase in costs for this year is likely to be the highest among major U.S. banks.
While the cost-cutting measures are viewed as a positive step, analysts have raised doubts about whether they will be sufficient to address the challenges faced by Truist, according to the report. Nonetheless, the company’s shares rose by 0.8% following the announcement.
During the company’s most recent earnings call, which was held in July, Rogers said the bank has been impacted by macroeconomic pressures.
“I don’t think it’s a surprise to anybody on this call that the increasing levels of uncertainty in our economy, the impact of interest rates on funding costs and a new sort … operating environment for our industry are impacting our results and plans,” Rogers said at the time.