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Zions (ZION) Eyes Headcount Reduction to Control Expenses
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At the Barclays Global Financial Services Conference, Zions Bancorporation, National Association’s (ZION - Free Report) CEO, Harris Simmons, said that the company’s headcount at the beginning of next year will be 3% lower than the prior year. While it is unclear whether the 3% includes attrition, the bank said that the reductions have been spread across ZION’s geographic and departmental footprints.
The cuts, impacting nearly 300 of 10,000 ZION’s employees, have majorly been in roles that do not deal directly with customers or generate revenues.
Similar to its peers, Zions is using these headcount reductions as a way to control expenses.
Simmons stated, “I talk to our peers, and everybody's looking for ways to cut costs.”
Amid the current tough economic backdrop, when labor costs are rising, most banks are using job cuts as a tool to reduce expenses and improve operating efficiency.
Wells Fargo & Company’s (WFC - Free Report) chief financial officer, Mike Santomassimo, said that the company is eyeing opportunities to cut down expenses by reducing its real estate footprint and headcount.
At the investor conference, Santomassimo said, “We continue to believe we’ve got a lot more to do to make the company as efficient as it should be.”
Since third-quarter 2020, WFC has cut almost 40,000 jobs. Santomassimo noted, “We had too much real estate before Covid, and so we’ve been methodically working through that portfolio over the last few years.”
Per a Financial Times article published a few days ago, The Goldman Sachs Group, Inc. (GS - Free Report) has been planning another wave of job cuts that could take place as soon as next month. This is part of its yearly practice of letting go of the lowest performers.
The expected move usually affects 1-5% of GS’s total staff. The company is aiming to cut jobs at the lower end of the range, primarily in its main business divisions like investment banking and trading.
GS has undergone a minimum of three phases of layoffs since last September, which is part of the company's deep cost-saving drive amid the slump in deal-making.
Like ZION, WFC and GS, Truist Financial (TFC - Free Report) is making efforts to reduce expenses. The company unveiled its strategic expense-saving program, which will result in approximately $750 million of gross savings (excluding one-time severance charges) to be realized over 12 to 18 months.
Driven partially by these initiatives, TFC expects its adjusted non-interest expenses in 2024 to be relatively stable or rise nearly 1%.
Notably, at the conference hosted by Barclays, ZION’s management also presented updates for net interest income (NII) and net interest margin (NIM). The company said that NII for July was $197 million and August's NII was $199 million. ZION reported NII of $204 million, $194 million and $193 million in April, May and June, respectively.
Likewise, Zions’ NIM expanded in July and August. NIM was 2.92% in July and 2.96% in August. The metric was 2.91% in June 2023. The improvement in NIM occurred despite the increase in total cost of deposits, which rose to 1.8% in July and 1.94% in August from 1.6% in June.
These updates show that Zions will be able to maintain decent NII growth in the current quarter and beyond despite not much improvement in the operating backdrop over the last couple of months.
Over the past six months, shares of ZION have gained 15.5% against the industry’s decline of 9.9%.
Image: Bigstock
Zions (ZION) Eyes Headcount Reduction to Control Expenses
At the Barclays Global Financial Services Conference, Zions Bancorporation, National Association’s (ZION - Free Report) CEO, Harris Simmons, said that the company’s headcount at the beginning of next year will be 3% lower than the prior year. While it is unclear whether the 3% includes attrition, the bank said that the reductions have been spread across ZION’s geographic and departmental footprints.
The cuts, impacting nearly 300 of 10,000 ZION’s employees, have majorly been in roles that do not deal directly with customers or generate revenues.
Similar to its peers, Zions is using these headcount reductions as a way to control expenses.
Simmons stated, “I talk to our peers, and everybody's looking for ways to cut costs.”
Amid the current tough economic backdrop, when labor costs are rising, most banks are using job cuts as a tool to reduce expenses and improve operating efficiency.
Wells Fargo & Company’s (WFC - Free Report) chief financial officer, Mike Santomassimo, said that the company is eyeing opportunities to cut down expenses by reducing its real estate footprint and headcount.
At the investor conference, Santomassimo said, “We continue to believe we’ve got a lot more to do to make the company as efficient as it should be.”
Since third-quarter 2020, WFC has cut almost 40,000 jobs. Santomassimo noted, “We had too much real estate before Covid, and so we’ve been methodically working through that portfolio over the last few years.”
Per a Financial Times article published a few days ago, The Goldman Sachs Group, Inc. (GS - Free Report) has been planning another wave of job cuts that could take place as soon as next month. This is part of its yearly practice of letting go of the lowest performers.
The expected move usually affects 1-5% of GS’s total staff. The company is aiming to cut jobs at the lower end of the range, primarily in its main business divisions like investment banking and trading.
GS has undergone a minimum of three phases of layoffs since last September, which is part of the company's deep cost-saving drive amid the slump in deal-making.
Like ZION, WFC and GS, Truist Financial (TFC - Free Report) is making efforts to reduce expenses. The company unveiled its strategic expense-saving program, which will result in approximately $750 million of gross savings (excluding one-time severance charges) to be realized over 12 to 18 months.
Driven partially by these initiatives, TFC expects its adjusted non-interest expenses in 2024 to be relatively stable or rise nearly 1%.
Notably, at the conference hosted by Barclays, ZION’s management also presented updates for net interest income (NII) and net interest margin (NIM). The company said that NII for July was $197 million and August's NII was $199 million. ZION reported NII of $204 million, $194 million and $193 million in April, May and June, respectively.
Likewise, Zions’ NIM expanded in July and August. NIM was 2.92% in July and 2.96% in August. The metric was 2.91% in June 2023. The improvement in NIM occurred despite the increase in total cost of deposits, which rose to 1.8% in July and 1.94% in August from 1.6% in June.
These updates show that Zions will be able to maintain decent NII growth in the current quarter and beyond despite not much improvement in the operating backdrop over the last couple of months.
Over the past six months, shares of ZION have gained 15.5% against the industry’s decline of 9.9%.
Image Source: Zacks Investment Research
Currently, ZION carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.