Sovereign Bancorp Inc. chief executive Joseph P. Campanelli on Wednesday gave guidance on what to expect from the Philadelphia company this year, including increases in deposits and loans.
Noting that this is the first time in many years that Sovereign does not have to integrate an acquisition, Mr. Campanelli said it will focus on improving customer service and cutting costs.
The $89.6 billion-asset company will put less emphasis on brokered and government deposits and will try to boost "core consumer and small-business deposit growth in our key markets," he said during a presentation at the Citigroup Inc. 2007 Financial Services conference in New York.
Sovereign expects a mid-single-digit increase in deposits this year and overall loan growth in the upper single digits, he told investors. Net interest income, meanwhile, should increase in the low single digits, said Mr. Campanelli, who was named CEO two weeks ago. He had been interim CEO since the ouster of Jay S. Sidhu in October.
He said he expects "continued strong growth in consumer banking and commercial," driving upper-single-digit overall loan growth despite a reduced loan portfolio. Sovereign will pull this off because of its decision late last year to exit the correspondent mortgage business, he said.
Expenses are expected to decline by $80 million this year, after a rigorous cost-reduction program Mr. Campanelli introduced in December that included 800 job cuts. He said Sovereign employees have submitted 324 suggestions on how to cut costs, 75 of which will be implemented and are projected to save $4.5 million.
Sovereign will open 18 branches this year and 22 in 2008, though Mr. Campanelli said previously that this year closings would outnumber openings.
