BofA’s Moynihan says signs of consumer weakness aren’t showing

Brian Moynihan, chief executive officer of Bank of America Corp., speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, US, on Wednesday, Oct. 12, 2022. This year’s conference theme is “The Search for Stability in an Era of Uncertainty, Realignment and Transformation.” Photographer: Ting Shen/Bloomberg

Ting Shen/Bloomberg

Bank of America Corp. is predicting a “shallow economy” though signs of weakness or stress aren’t showing yet, according to Chief Executive Officer Brian Moynihan.

“Consumers are spending, they have money, they are employed and they have good credit,” Moynihan said Monday in an interview with Bloomberg Television. That makes the Federal Reserve’s job to slow the economy down “tougher,” he said. “If consumers have money in this big consumer economy, that’s what keeps America strong.”

The bank reported earlier in the day record net interest income of $13.8 billion for the third quarter on benefits from Federal Reserve rate hikes and loan growth. Traders also fared well, with bond and equity-trading revenue both beating analyst expectations. 

The CEO said consumers remain in good shape amid inflation and rising rates. The bank is seeing spending increase, though at a slower rate compared with previous periods. Credit-card delinquencies remain low, while balances are above pre-pandemic levels, results show. 

Moynihan’s optimism stands in contrast to the views of his Wall Street peers. JPMorgan Chase & Co.’s Jamie Dimon has said there are “significant headwinds immediately in front of us.” And Citigroup’s Jane Fraser said she expects that the U.S. may face a mild recession in the second half of next year.

There are reasons for caution in the leveraged-loan market, as botched debt underwriting deals leave banks with millions in funding on balance sheets. The market is “still bouncing around too much,” Moynihan said Monday.

“There’s a natural retrenching that went on,” as prices “blew out,” he said. “The restart of that market is going to take a little bit.”

Though the bulk of the activity remains outside of the core banking unit, it still has an impact and should be looked at with caution, the CEO said. “At the end of the day, it affects our system, even when it is done outside of it,” he said. 

The bank isn’t looking to change headcount as it pushes to gain market share and keep expenses in check, and payroll won’t diminish, according to Moynihan. “Right now we are flat and expected to maintain flat.”