US bank Truist plans ‘sizable’ job cuts to save $300 million in costs

Sept 11 (Reuters) – Truist Financial (TFC.N) is planning “sizable reductions” to its workforce over the next few months to save roughly $300 million in costs and said the bank’s revenue for the current quarter was likely to be in line with its expectations.

The layoffs, part of a larger cost savings program, will be underway from the current quarter to the first quarter of 2024, Truist said in a presentation to investors on Monday, sending shares 2% higher in mid-morning trading.

“Other cost savings initiatives include aggressively managing third-party spend, further reducing our corporate real estate footprint and rationalizing tech spend,” said CEO Bill Rogers at the Barclays Financial Services Conference.

Analysts at Goldman Sachs said the expense program helps provide a “credible” path to holding costs relatively flat.

Truist added that along with tech optimization and organizational simplification, it will yield a combined $750 million in savings over 12 to 18 months. It also expects expense growth in 2024 to be significantly lower than 2023.

“We aren’t convinced it will be enough for investors …. were hoping for more substantive cuts,” analysts at brokerage Raymond James wrote in a note.

Banks, which typically thrive in times of stable economic growth, are grappling with the possibility of a recession that might lead to troubled customers finding themselves burdened under debt on their credit cards and mortgages.

The failures of three U.S. lenders earlier this year sparked the biggest industry crisis since 2008. While the turmoil has subsided in recent months, investors have remained cautious.

Truist, however, said it was confident capital markets business will rebound next year and expects dealmaking recovery as an opportunity for revenue growth going ahead.

“Our revenue and adjusted expenses for the third quarter and for full year 2023 are tracking in line with the outlook that we provided,” Rogers said.

In July, Truist missed estimates for second-quarter profit, as the bank set aside more rainy-day funds.

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