Regions Financial in Birmingham, Ala., has lowered its forecast for annual loan growth, citing weak demand for commercial loans.

Speaking at an industry conference in New York on Wednesday, Chairman and Chief Executive Grayson Hall said the $126 billion-asset company now expects total loans to increase by less than 3% this year. Regions previously guided to year-over-year growth as high as 5%.

"We have yet to see small-business owners fully return to the market with confidence to invest and expand," Hall said, describing feelings of uncertainty and "less optimism" among commercial clients.

Ongoing efforts to scale back in energy and commercial real estate have also contributed to lower-than-expected growth.

Regions also expects to announce more expense cuts in coming months, Hall said during his presentation at the Barclays Global Financial Services Conference.

The company in January announced plans to slash costs by $300 million – or 9% of total expenses – by the end of 2018. It has since made progress on its goals, closing branches and eliminating over 1,000 positions in the past year, Hall said.

With low interest rates weighing on revenue, the company has begun exploring new ways to trim costs.

During the second quarter, total revenue at Regions fell 2% from a year earlier, to $1.4 billion. Profit fell 4%, to $259 million.

"Later this year, we'll talk about how much further we can go, but I do believe that the current environment demands" more expense cuts, Hall said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.