BofA CEO Moynihan says US economy headed for soft landing
2023.11.08 12:48
© Reuters. Bank of America Chairman and CEO Brian Moynihan testifies before a Senate Banking, Housing, and Urban Affairs hearing on “Annual Oversight of the Nation’s Largest Banks”, on Capitol Hill in Washington, U.S., September 22, 2022. REUTERS/Evelyn Hockstein/ F
By Lananh Nguyen and Saeed Azhar
NEW YORK (Reuters) -Bank of America CEO Brian Moynihan said on Wednesday he expects a soft landing in which the U.S. economy avoids a recession even as consumer spending and commercial borrowing slow.
“Our research team is the best in the business and they have moved to the soft landing category. They have a slowdown in the economy in the middle of next year,” Moynihan said in a wide-ranging interview at the Reuters NEXT conference.
He said consumer spending has slowed to 4% to 4.5% at the bank in October, about half the pace seen earlier this year, while commercial customers are not borrowing as much.
For months, Moynihan has cited healthy consumer finances and spending as indications that the U.S. economy could avoid recession. His views often contrasted with the pessimism of industry peers.
Bank of America economists predict the U.S. economy will grow 2.7% this year and 0.7% in 2024. In the so-called soft landing scenario, economic growth slows, but remains positive.
Its economists also expect the Federal Reserve will raise interest rates again in December to reach a terminal range of 5.50% to 5.75%.
Speaking about investment banking, Moynihan said there is a “tremendous pipeline of activity.”
He said the bank is looking to grow the team that targets middle-market investment banking activity.
“We’re trying to push our investment banking capabilities deeper out into the market. We went from 60 people to 200 people and we’ll double up again,” Moynihan said.
Bank of America’s traders brought in the highest revenue in more than a decade in the third quarter, while its investment bankers bucked an industrywide slump.
The lender’s third-quarter profits beat Wall Street estimates as it joined other big lenders in earning more on loan interest payments, it reported in October.
Wall Street succession plans have come into focus in recent months as the tenures of financial crisis-era leaders stretch on.
Moynihan said the bank has a succession plan in place but gave no timeline.
“When I decide or the board decides that my time is up we will activate that plan,” he said.
Morgan Stanley CEO James Gorman, who took the helm at the same time as Moynihan in 2010, will hand the reins to Ted Pick at the end of the year. In 2021, Moynihan signaled he would drive the firm through a second decade.
