Bank of America Corp. Chief Executive Officer Brian Moynihan predicts a superficial economy even though the stress or weakness is not apparent.
In a television interview with Bloomberg Television Monday, Moynihan said the consumers are spending because they have jobs and good credit. This is making the job of the Federal Reserve tough. Despite hiking interest rates, the economy is not slowing down, and inflation remains elevated. Moynihan said that consumers having money is what is keeping America strong.
BofA, based out of Charlotte, North Carolina, reported a net interest income of $13.8 billion for the third quarter. This increase was due to the benefits received from the rate hikes and growth in loan disbursements by the bank. The trading results also did well, with equity and bond trading surpassing revenue estimates by analysts.
CEO Moynihan said despite inflation and rising rates, consumers were in good shape. The spending has increased though it was slower than in the previous quarters. Balances continued to climb while credit card delinquencies remained low.
Shares of BofA rose to $33.62 in New York on Monday, up 6%, though it remained 24% in decline this year.
Moynihan’s optimism sharply contrasts with his competitor’s views on Wall Street. JPMorgan Chase & Co CEO Jamie Dimon said there were major headwinds in front of them. Jane Fraser, CEO of Citi Group, expects the US to face a mild recession in the second half of 2023.
Cautious Market
The caution in the market is due to the loan market, which is leveraged when debt underwriting defaults. This leaves the banks with millions of underwriting exposures on their balance sheets. According to Moynihan, the market is bouncing too much, with natural retrenching. The restart of the market will take some time.
Moynihan says that though the bulk of transactions is happening outside core banking, it still has an impact, and a done should be cautious. He said BofA is not planning to reduce headcount as it pushes forward to gain market share and control expenses.
