Truist Financial continues its effort to save $750 million as the bank prioritizes efficiency and eliminates redundancies.
The savings are to be addressed by: $300 million in reductions, $250 million in organizational alignment and $200 million in rationalizing technology spend, according to today’s earnings presentation. No specific examples of reductions were provided by the bank.
The savings program is expected to be realized over 12 to 18 months, according to the presentation.
“Since these initiatives were announced in mid-September, we have already realized significant elements of our organizational and operational structure to improve efficiency and to drive revenue opportunities,” Chief Financial Officer Mike Maguire said during the bank’s Q3 2023 earnings call today.
BIGGER PICTURE: The bank is tightening the reins on spending as it incurs higher-than-expected costs from the ongoing SunTrust and BB&T merger, Chief Executive Bill Rogers previously said during the bank’s Q2 earnings call.
Pullback on spending was evidenced earlier this month when the Charlotte, N.C.-based Truist shuttered an innovation center and made key staffing changes. The bank closed the center, the Foundry unit; lost Ken Meyer, who served as the bank’s chief information and experience officer; and saw eight board members retire or leave for other reasons.
Truist’s cost savings follows the bank’s September layoffs and ongoing efficiency moves.
BY THE NUMBERS: Truist reported in Q3:
- 4.7 million app users, up 8% YoY;
- The number of digital transactions grew 9% YoY to 72 million;
- Software expenses increased 6% YoY to $238 million; and
- The efficiency ratio increased to 68% from 62% in Q3 2022.
NOTEWORTHY: As the bank looks to save money, it is shrinking its headcount and footprint, Maguire said.
In Q3, the bank’s headcount totaled 51,943 full-time employees, down from 52,648 during the same quarter last year, and down from 52,564 from Q2 2023, according to the earnings supplement.
Truist’s footprint is also expected to shrink, Maguire said. “The work we are doing includes optimizing spans and layers to improve organizational design health, consolidating redundant functions, restructuring select businesses and geographic simplification, all of which will result in reductions in force over the next couple of quarters,” he said.
MARKET REACTION: Shares of Truist Bank [NYSE: TFC] were down 2.37% from market open to $28.06 as of market close today. Truist has a market capitalization of $37.5 billion.
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