Bank of America CEO Moynihan says the US economy is headed for a soft landing

Bank of America CEO Moynihan says the US economy is headed for a soft landing

NEW YORK (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 business borrowing slow.

“Our research team is the best in the business and they have moved into 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 slowed to 4% to 4.5% at the bank in October, about half the pace seen earlier this year, while business clients are not borrowing as much.

For months, Moynihan has been citing the good financial health of consumers and spending as indicators that the U.S. economy may avoid a recession. His views often contrast with the pessimism of his industry peers.

Economists at Bank of America expect the US economy to grow by 2.7% this year and 0.7% in 2024. In the so-called soft landing scenario, economic growth slows, but remains positive.

Economists also expect the Federal Reserve to raise interest rates again in December, reaching an eventual range of 5.50% to 5.75%.

Speaking of investment banking, Moynihan said there was a “huge pipeline of activity”.

He said the bank is looking to grow the team targeting middle market investment banking activity.

“We’re trying to push our investment banking capabilities deeper into the market. We’ve gone from 60 people to 200 people and we’ll double it again,” Moynihan said.

Bank of America’s traders posted their highest revenue in more than a decade in the third quarter, while its investment bankers weathered an industry-wide slump.

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

Succession plans on Wall Street have come into focus in recent months as the tenure of financial crisis-era leaders continues.

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

“When I or the board decides that my time is up, we will activate this plan,” he said.

Morgan Stanley CEO James Gorman, who took over at the same time as Moynihan in 2010, will hand over the reins to Ted Beck at the end of the year. In 2021, Moynihan indicated that he would lead the company through its second decade.

Reporting by Lanan Nguyen in New York, writing by Niket Nishant in Bengaluru; Editing by Chizuo Nomiyama and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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Lanann Nguyen is the US finance editor for Reuters in New York, covering US banking. She joined Reuters in 2022 after reporting on Wall Street for the New York Times. Lannan spent more than a decade at Bloomberg News in New York and London, where she wrote extensively on banking and financial markets, and previously worked at Dow Jones Newswire/The Wall Street Journal. Lannan holds a bachelor’s degree in political science from Tufts University and a master’s degree. in Finance and Economic Policy from the University of London.

Saeed Azhar is a financial journalist with Reuters and a member of the US banking team covering the largest banks on Wall Street. 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 finance in Southeast Asia. Contact: +1-3479086341

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