Following Bank of America Corp’s (NYSE: BAC) better-than-expected quarterly results, CEO Brian Moynihan said the bank’s deposits remain stable, and the consumer remains healthy.
BofA reported second-quarter financial results Tuesday morning. The company said quarterly revenue increased 11% year-over-year to $25.33 billion, which beat estimates of $25.05 billion. BofA reported quarterly earnings of 88 cents per share, which came in ahead of estimates of 84 cents per share.
In its global wealth and investment management business, BofA saw client balances climb 8% during the quarter, driven by market conditions and positive client flows. Loan demand remained steady during the quarter.
Global transaction services revenue jumped 23% year-over-year in BofA’s global banking business. Sales and trading revenue increased 3% in the bank’s global markets business.
Average deposit balances declined 1% sequentially and 7% year-over-year to $1.9 trillion.
Tuesday afternoon on CNBC’s “Power Lunch,” Moynihan noted that the decline in deposits is representative of normal flow activity.
“Those deposits are very stable and they represent a dominant part of the money that people move to conduct their daily lives … that money is always in motion,” the BofA CEO said.
Although credit cost levels haven’t returned to pre-pandemic levels, the 2019 levels were 40- or 50-year lows, Moynihan stressed, adding the bank is seeing a normalization.
U.S. consumer spending rates grew at around 5% in the second quarter, which is about half of the rate that spending was growing in the prior quarter and toward the end of 2022, he said.
“That’s showing that the consumer is more in line with the low inflation, lower growth economies that were there in ’16, ’17, ’18, ’19, when the Fed raised rates and inflation was low,” Moynihan said.
“That gives me the view that inflation is getting under control.”
That’s a good sign because the Fed has been able to cool inflation without really hurting the labor market, he said. It’s starting to look like what he called an “unemploymentless” slowdown, Moynihan said: “Which would be a fantastic outcome.”
According to the BofA CEO, consumers are employed and spending, earning more money and maintaining savings.
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Edited by Arnab Nandy
