Truist Financial Cuts Back to Grow, Targeting Deposits, Wealth and Payments

Key Points

• Truist is exiting or scaling back select lending businesses and reviewing expenses to free capital, reduce wholesale borrowings and strengthen its credit profile—even if the moves initially shrink the bank.
• The bank plans to invest in core checking deposits, wholesale banking, wealth and payments, including adding bankers and advisers and upgrading digital services. Executives see opportunities to deepen existing client relationships and are confident in 4%–6% loan growth.
• Truist reaffirmed its goal of a 15% return on tangible common equity next year and 16%–18% over the medium term, supported by stronger client relationships, improved funding and disciplined capital allocation.

Truist Financial NYSE: TFC is reviewing businesses and expenses to free up capital for growth, with a focus on consumer deposits, wholesale banking and wealth management, executives said at an investor event.

CFO Mike Maguire said the strategic review remains in progress and is assessing whether activities align with the bank’s strategy, can meet return objectives, or protect the firm or serve clients. Truist has de-emphasized or stopped originating loans in areas including marine and recreational vehicle lending and subprime auto, divested Regional Acceptance Corp. and announced a sale of LightStream, he said.

Those moves may initially make the bank smaller, but are intended to build a foundation for growth, Maguire said. He added that Truist has used the divestitures to reduce wholesale borrowings, shorten the duration of its securities portfolio and improve its credit profile.

Deposit growth and wholesale investment

In consumer banking, Truist plans to concentrate on core checking and demand deposit account growth, with lending products supporting that objective. Maguire said the bank’s consumer performance has fallen short of its potential and that improving it will require investment in branches, ATMs, digital services and marketing, as well as greater execution accountability.

Chief Wholesale Banking Officer Kristin Lesher said the bank also plans to add frontline staff in middle-market, commercial and corporate banking, certain investment banking areas and wealth. Payments and advisory services are among the businesses with the most room to scale, she said.

Truist has added close to 500 wholesale bankers over the past couple of years, primarily in commercial and corporate banking and payments, according to Lesher. Some of that hiring upgraded existing talent rather than increasing total staffing. She said the bank also needs more staff originating business in areas such as asset-based lending, foreign exchange and rates.

Lesher described client loan demand as steady and said she was confident in Truist’s ability to deliver loan growth within its guided 4% to 6% range. The bank is also reviewing wholesale capital deployment and shifting resources toward client relationships where it sees better growth opportunities, she said.

Wealth and payments opportunities

Lesher said Truist’s wealth business has more than $300 billion in client assets and about 1,000 advisers. Only about 3% of its existing client base uses the bank for investment services, she said, while roughly 30% of wealth clients have a loan with Truist.

The bank plans to add advisers and invest in technology for both clients and advisers. It also sees opportunities to provide more loans and deposit accounts to wealth clients. New client acquisition in wealth is twice its earlier level, with roughly half coming from existing consumer and wholesale relationships, Lesher said.

In payments, Truist has invested in products, digital capabilities and sales staff, but remains in the early stages of commercializing those investments, she said. The bank intends to add treasury management salespeople and accelerate product development, including capabilities for larger corporate clients.

Returns, costs and capital

Maguire said Truist remains confident it can achieve a 15% return on tangible common equity next year and 16% to 18% over a medium-term horizon. Deeper client relationships, a better funding mix, capital allocation discipline and improving securities yields are among the expected contributors, he said.

Truist is scrutinizing expenses across the company to fund investments, including technology projects, real estate and overlapping work. Maguire said the bank remains mindful of medium- and long-term profitability and had previously said it did not expect a “seismic shift” in its approach to cost management.

On capital returns, Maguire said the plan continues to contemplate an elevated payout relative to many peers. Truist ended the third quarter with a 10.7% common equity tier 1 ratio, he said, and continues to view an operating target of approximately 10% as reasonable.

About Truist Financial (NYSE:TFC)

Truist Financial Corporation is a financial services company headquartered in Charlotte, North Carolina, operating through its principal subsidiary, Truist Bank. The company provides banking, lending, investment, insurance and wealth management services to consumers, small businesses, commercial clients and institutional customers.

Its offerings include checking and savings accounts, mortgages, consumer loans, credit cards, commercial and industrial lending, treasury and payment services, investment banking, brokerage, asset management and insurance products.

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