BofA CEO Moynihan says the US economy is headed for a soft landing

[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 LICENSES

NEW YORK, Nov 8 (Reuters) – Bank of America (BAC.N) CEO Brian Moynihan said on Wednesday he expects a soft landing with the U.S. economy avoiding a recession, even as consumer spending and the commercial borrowing declines.

“Our research team is the best in the industry and they have moved into the soft landing category. “You see 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 at the bank slowed to 4 percent to 4.5 percent in October, about half as fast as earlier in the year, while commercial customers are not borrowing as much.

For months, Moynihan has cited healthy consumer finances and spending as signs that the U.S. economy could avoid a recession. His views often contrasted with the pessimism of his industry colleagues.

Economists at Bank of America expect the U.S. economy to 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 to raise interest rates again in December to reach a final range of 5.50% to 5.75%.

When it comes to investment banking, Moynihan said there is a “tremendous pipeline of activity.”

He said the bank wanted to expand the team specializing in mid-market investment banking activities.

“We are trying to expand our investment banking capabilities more into the market. We went from 60 to 200 employees and will double that number again,” Moynihan said.

Bank of America traders posted their highest revenue in more than a decade in the third quarter, while its investment bankers defied an industrywide slump.

The lender’s third-quarter earnings beat Wall Street estimates as it joined other major lenders in earning more from loan interest payments, reported in October.

Succession plans on Wall Street have come into focus in recent months as the tenures of financial crisis-era executives continue to lengthen.

Moynihan said the bank has a succession plan, but did not provide a timeline.

“If 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 over the reins to Ted Pick at the end of the year. In 2021, Moynihan announced that he would lead the company through a second decade.

Reporting by Lananh Nguyen in New York, writing by Niket Nishant in Bengaluru; Edited by Chizu Nomiyama and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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Lananh Nguyen is U.S. financial editor at Reuters in New York and leads coverage of U.S. banks. She joined Reuters in 2022 after covering Wall Street for 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. She previously worked at Dow Jones Newswires/The Wall Street Journal. Lananh holds a BA in Political Science from Tufts University and an M.Sc. in Finance and Economic Policy from the University of London.

Saeed Azhar is a financial journalist at Reuters and part of the U.S. banking team covering Wall Street’s largest 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 Middle East finance team from Dubai and also worked in Singapore, where he covered Southeast Asia financing. Contact: +1-3479086341