Balance Sheet Optimization, Expense Discipline, Digital Growth Define Truist’s Quarter

After weathering volatility in recent years, banks can now deploy excess capital, signaling confidence in their long-term growth prospects.

That was the story shared by Truist executives during a third-quarter 2024 earnings call Thursday (Oct. 17). They said the bank “returned $1.2 billion of capital to our shareholders in the form of our common stock dividend and share repurchases completed during the quarter.”

The broader macroeconomic environment, marked by higher interest rates, inflationary pressures and uneven consumer spending, presents a challenging backdrop.

Yet, banks like Truist have shown they can maintain profitability by optimizing their balance sheets, managing risk and focusing on core business growth areas — often with the help of digital tooling and process modernizations.

“In the third quarter, we made considerable progress on driving revenue growth through our core banking business by adding new clients, deepening relationships, hiring and developing talented teammates, and investing in technology and infrastructure while maintaining strong expense discipline,” Truist Chairman and CEO Bill Rogers said during the call.

The company’s total revenue for the quarter was up $6.8 billion, a rebound from the loss-driven previous quarter.

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Attracting Relationships Through Seamless Experiences

The broader story within Truist’s Q3 2024 financials revealed several key themes shaping the banking landscape, particularly the importance of digital transformation as a competitive differentiator, a focus on efficiency and cost control, and balance sheet optimization in a dynamic rate environment.

Per the bank’s earnings presentation , Truist increased digital adoption and production with new digital account openings up 7%. Seventy-two percent of digital deposits applications were completed on a mobile device, with total mobile applications up 49% year over year. Digital channels accounted for 33% of overall checking account production in Q3 with 65% opened by new customers.

Truist’s growth in digital adoption and account openings reflects an industry-wide pivot toward digital banking, as customers increasingly prefer mobile and online services. This trend is driving banks to accelerate investments in digital infrastructure to enhance customer experience, improve operational efficiency and deepen client relationships.

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While the macroeconomic environment remains uncertain, banks like Truist are demonstrating adaptability through balance sheet optimization, expense discipline and a focus on digital growth.

For example, the 3.12% increase in Truist’s net interest margin (NIM) is a direct result of balance sheet optimization, a strategy by banks to mitigate the impact of higher funding costs in a rising rate environment. The banking sector is grappling with tighter margins as higher interest rates increase the cost of deposits and other funding sources.

However, by repositioning assets and investing in higher-yielding securities, banks like Truist have been able to boost NIM and maintain profitability. This highlights the importance of asset-liability management, where banks are fine-tuning their balance sheets to balance risk and reward.

Similarly, cost control is paramount as banks seek to protect margins. With rising costs — particularly funding costs driven by higher interest rates — banks are tightening their operational models. Truist’s ability to reduce noninterest expenses by 5.4% quarter-over-quarter signals a broader effort across the industry to streamline operations and make necessary technology investments without increasing overhead. This is indicative of a shift toward leaner, more agile banking institutions, which are re-evaluating cost structures to maintain profitability.

Elsewhere, another key trend highlighted in Truist’s earnings results is the slight decline in average loans, particularly in the commercial and industrial (C&I) and residential mortgage portfolios.

This reflects a broader challenge for the banking sector: tepid loan demand amid higher borrowing costs. Businesses are pulling back on debt financing, and consumers are more cautious about taking out loans, particularly mortgages, as rates rise. The muted loan growth seen across many banks suggests that while profitability remains intact through higher NIM, lending activity could face headwinds as long as interest rates remain elevated and economic uncertainty persists.