Citigroup isn't the only bank taking a knife to its expenses. Wachovia, First Horizon and SunTrust are also girding for a slowdown.
The Wall Street Journal says banks are preparing for a period of squishier credit quality, "a difficult interest-rate environment," and increasing competition for deposits. Wachovia has promised to cut its expenses, First Horizon National in Memphis will announce a new effort to find places to cut costs, and SunTrust Banks in Atlanta is expected to also announce new cuts, which could include layoffs.
In its earnings announcement yesterday, Wachovia said its long-term effort to consolidate its workforce, enhance its technology and tighten its spending is paying off: The bank's efficiency ration - which measures costs as a percentage of revenue - dropped to 55.7 percent from 60.1 percent last year.
Wachovia said first-quarter net rise 33 percent, largely on the strength of its acquisition of Golden West Financial. However, the Winston-Salem (N.C.) Journal notes that Golden West could weigh on Wachovia's overall business as the U.S. housing market cools. Chief executive Ken Thompson told analysts during a conference call that while cost-cutting continues to be a focus of the bank's, "we not going to announce further specific efficiency initiatives. It's simply in our DNA now and we're going to continue to operate that way."