BofA CEO Moynihan says US economy headed for soft landing

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NEW YORK, Nov 8 (Reuters) – Bank of America (BAC.N) 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%.

Moynihan said the Federal Reserve may hike one more time although it is not a certainty, while expectations are that rates will come down in the second half of next year.

“It takes to the end of ’25 to get inflation down to the low twos level,” he said.

Speaking about investment banking, Moynihan said there is a “tremendous pipeline of activity.”

[1/3]Bank of America Chairman and CEO Brian Moynihan speaks with Reuters journalist Lananh Nguyen at the ReutersNEXT Newsmaker event in New York City, New York, U.S., November 8, 2023. REUTERS/Brendan McDermid Acquire Licensing Rights

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 industry-wide 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.

To view the live broadcast of the World Stage go to the Reuters NEXT news page: https://www.reuters.com/world/reuters-next/

additional reporting by Tatiana Bautzer; Editing by Chizu Nomiyama, David Gregorio and Edward Tobin

Our Standards: The Thomson Reuters Trust Principles.

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Lananh Nguyen is the U.S. finance editor at Reuters in New York, leading coverage of U.S. banks. She joined Reuters in 2022 after reporting on Wall Street at The New York Times. Lananh spent more than a decade at Bloomberg News in New York and London, where she wrote extensively about banking and financial markets, and she previously worked at Dow Jones Newswires/The Wall Street Journal. Lananh holds a B.A. in political science from Tufts University and an M.Sc. in finance and economic policy from the University of London.

Saeed Azhar is a Reuters financial journalist and part of the U.S. banking team, which covers Wall Street’s biggest banks. He focuses on Goldman Sachs and Bank of America, and also writes about regional banks. Before moving to New York in July 2022, he led the finance team in the Middle East from Dubai, and also worked in Singapore, covering Southeast Asia finance.
Contact: +1-3479086341

Niket Nishant reports on breaking news and the quarterly earnings of Wall Street’s largest banks, card companies, financial technology upstarts and asset managers. He also covers the biggest IPOs on U.S. exchanges, and late-stage venture capital funding alongside news and regulatory developments in the cryptocurrency industry. His writing appears on the finance, business, markets and future of money sections of the website. He did his post-graduation from the Indian Institute of Journalism and New Media (IIJNM) in Bengaluru.

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