BofA’s Moynihan says bank is sticking to its original hiring plans
Bank of America is keeping to its original hiring plans despite challenging economic conditions that have prompted others to pull back, Chief Executive Brian Moynihan said.
“We don’t have any plans to make any major adjustments because frankly we have those plans to adjust our headcount at all times,” Moynihan said in an interview with Bloomberg Television Thursday. “It’s a constant planning process in our company — how we use that human capital even more effectively and efficiently.”
The bank keeps expenses flat by managing headcount, he said. It added more than 1,600 staff in the second quarter, according to the company’s earnings report. Moynihan’s comments come after Goldman Sachs Group said it was slowing the pace of hiring to rein in expenses. Goldman Sachs will also reinstate annual performance reviews — a practice it had suspended during the pandemic and typically used to weed out the worst-performing staff.
Simon Dawson/Bloomberg
Bank of America reported earlier this week that second-quarter net interest income jumped 22% as it benefited from Federal Reserve rate hikes. The company expects NII, a key source of revenue, to grow further as “rates are lifting off of the floor,” Moynihan said.
The CEO said consumers remain healthy despite soaring inflation and geopolitical turmoil. The bank is seeing borrowing and spending increase, with loans — led by credit cards and mortgages — back to pre-pandemic levels, he said. Credit quality remains strong with no uptick in delinquencies, according to Moynihan.
“It really is unusual to have consumers have the amount of money they have to spend still in their accounts, spending at the level they’re spending above the rate of inflation, and have wage growth and unemployment so low,” Moynihan said.
Trading business
The bank as an organic growth engine has “kicked back in,” Moynihan said. Its trading business, which was pushing to gain more market share under previous head Tom Montag and current leader Jim DeMare, is “done” with the growth initiative it had in place. “We’re the size we want to be,” Moynihan said of the business.
Like its Wall Street peers, Bank of America faced declines in investment banking revenue and deal fees. Still, Moynihan said he was pleased with the firm’s performance even though the bank “didn’t use the risk that they had available to them because market opportunities and client demand wasn’t there.”
”The Fed is raising rates to adjust, but “there is still work to do,” Moynihan said. Regulators’ “toughest job” is to slow down an economy characterized by strong wage growth and low unemployment, “but they’re using the tools they have, which is basically to raise rates and change the balance sheet,” he said.
“We’re not seeing the stress. And when we talk to our customers, they’re not seeing the stress in their business models yet,” Moynihan told Bloomberg. The Charlotte, North Carolina-based bank saw loan balances continue to increase, and commercial small-business loan origination was up compared to a year ago, he said.
The largest U.S. bank saw account balances increase in June and July, while borrowing also went up across credit cards, home-equity lines and mortgages. Based on the data, the consumer is strong, but sentiment and confidence is down because of inflation and rising costs, the chief executive said.
— With assistance from David Westin.
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