Brian Moynihan, chief government officer of Financial institution of America Corp., throughout a panel session on company ESG requirements on the World Financial Discussion board in Davos, Switzerland, on Wednesday, Jan. 18, 2023.
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Financial institution of America CEO Brian Moynihan mentioned Tuesday he sees solely a slight recession hitting the U.S. as customers stay in stable form.
“All the pieces factors to a comparatively gentle recession given the quantity of stimulus that was paid to individuals and the cash they’ve left over,” Moynihan mentioned on the financial institution’s quarterly earnings name. “On the finish of the day, we do not see the exercise on the patron aspect slowing at a tempo that may point out that, however we might see business prospects are being extra cautious.”
Moynihan mentioned that Financial institution of America’s analysis workforce has been constant in calling for a light downturn in mild of the Federal Reserve’s aggressive price hikes. The central financial institution has raised its benchmark rate of interest 9 instances over the previous 12 months for a complete of 4.75 proportion factors, the quickest tempo of tightening for the reason that early Nineteen Eighties.
The financial institution is predicting annualized GDP contraction within the vary of half to 1 proportion level within the subsequent three quarters earlier than going again to constructive development, he mentioned.
Moynihan took solace in a low unemployment price and easing wage inflation, which ought to forestall the economic system from tipping right into a deep recession.
“The truth that unemployment continues to be 3.5% [indicates] full employment-plus. After which the wage development is slowing and tipping over,” he mentioned. “So the indicators of inflation are tipping down and it is nonetheless there however that interprets into comparatively good exercise so we see a slight recession and we’ll see what occurs.”
Financial institution of America on Tuesday reported first-quarter earnings and income that topped expectations on the again of upper rates of interest. The financial institution mentioned its web curiosity earnings — what it makes lending minus what it pays out to prospects — jumped 25% to $14.4 billion in the course of the quarter from a 12 months earlier.
“Our stress eventualities are at all times lower than anyone else’s due to how we constructed the corporate to undergo issues together with the pandemic,” Moynihan mentioned.