Truist Financial Charts A Recovery Path After 43% Stock Decline In 2023 Since Its February Peak: Analysis

After a challenging 2023, Truist Financial TFC is implementing significant changes that could boost its stock performance.

According to a report by Barron’s, the banking mini-crisis in March significantly affected Truist. The company’s stock has dropped by 43% since its February 2023 peak, a decline more significant than the 34% recorded by the SPDR S&P Regional Banking exchange-traded fund (KRE).

However, Truist has now recognized that it needs to improve its operations. It plans to cut costs by selling or closing underperforming businesses and reducing its workforce.

These measures, combined with growth in its fee-based businesses like insurance, could potentially boost its sales, margins, and earnings growth. Truist’s valuation is currently near the bottom of the banking sector, and its substantial dividend is seen as attractive for investors waiting for a turnaround.

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Truist’s previous struggles stem from problems following the merger of BB&T and SunTrust Banks in 2019. The banks were never properly integrated, causing costs to surge and profits to decline.

CEO William Rogers recently announced plans to eliminate $750 million in operating expenses over the next 12 to 18 months at an industry conference. These cuts include $300 million from layoffs, $250 million from business realignment, and $200 million from technology supporting lending and wealth management.

These changes are expected to stabilize the company’s expense growth at around 0% to 1% in 2024, down from the estimated 7% in 2023.

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