1 00:00:02,400 --> 00:00:07,120 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,040 --> 00:00:10,160 Speaker 2: For Bloomberg audience worldwide. I'm David Weston. Joining us now 3 00:00:10,240 --> 00:00:12,719 Speaker 2: is Brian Moonton, and he is the chair and CEO 4 00:00:12,840 --> 00:00:15,000 Speaker 2: of Back of America. So welcome. It's good to have 5 00:00:15,040 --> 00:00:15,920 Speaker 2: you on earnings day. 6 00:00:15,920 --> 00:00:18,040 Speaker 1: Brian, that's great to be here. David, good to see 7 00:00:18,079 --> 00:00:18,400 Speaker 1: you again. 8 00:00:18,720 --> 00:00:20,959 Speaker 2: So let's start with lending, which is so important to 9 00:00:20,960 --> 00:00:24,400 Speaker 2: Back of America, really a leader in commercial lending, and 10 00:00:24,440 --> 00:00:26,479 Speaker 2: that interest income is something we've been talking about an 11 00:00:26,520 --> 00:00:28,440 Speaker 2: awful lot. You had said it would be a trough 12 00:00:28,480 --> 00:00:31,040 Speaker 2: in all likely the second quarter, coming back fourth quarter. 13 00:00:31,400 --> 00:00:33,400 Speaker 2: But I'm curious about when you look at it, what 14 00:00:33,520 --> 00:00:36,080 Speaker 2: are the things driving that right now? Up or down? 15 00:00:36,240 --> 00:00:39,720 Speaker 2: Is it loan demand? Is it the cost of deposits? 16 00:00:39,920 --> 00:00:41,760 Speaker 2: What are the things that are feeding into that right now? 17 00:00:41,880 --> 00:00:44,800 Speaker 3: Yeah, So I think make it straightforward, we have at 18 00:00:44,840 --> 00:00:47,320 Speaker 3: one point nine to one trillion dollars of deposits and 19 00:00:47,360 --> 00:00:50,240 Speaker 3: we have about a billion fifty loans, a trillion fifty loans, 20 00:00:50,560 --> 00:00:53,479 Speaker 3: and so the money we earn on spread and that 21 00:00:53,600 --> 00:00:57,920 Speaker 3: instincome is the difference between what we deposit rates paid, 22 00:00:58,000 --> 00:01:01,160 Speaker 3: loan rates received and then ultimately investing in cash. The 23 00:01:01,200 --> 00:01:03,840 Speaker 3: other eight hundred million dollars you have to invest. So first, 24 00:01:03,920 --> 00:01:06,240 Speaker 3: what's driving demand? I think is actually an interesting thing. 25 00:01:06,280 --> 00:01:09,800 Speaker 3: So if you look across the loan categories, credit card 26 00:01:09,840 --> 00:01:12,440 Speaker 3: growth was decent, home akery growth is kind of bouncing 27 00:01:12,480 --> 00:01:15,520 Speaker 3: along because consumers aren't using their home acry loans yet 28 00:01:15,560 --> 00:01:19,440 Speaker 3: they may. Mortgage lending activity relatively flat. There you go 29 00:01:19,440 --> 00:01:21,160 Speaker 3: on the commercial side. The great news is we grew 30 00:01:21,200 --> 00:01:23,320 Speaker 3: small business and business banking, which is our fifty mini 31 00:01:23,400 --> 00:01:26,399 Speaker 3: Hutter segment. It grew for small business of the twentieth 32 00:01:26,400 --> 00:01:29,160 Speaker 3: consecutive quarter with the number one small business lender. Despite 33 00:01:29,200 --> 00:01:31,319 Speaker 3: what you hear, we are the largest small business lender 34 00:01:31,319 --> 00:01:34,560 Speaker 3: in America and that grew, which means there's activity. But 35 00:01:34,600 --> 00:01:36,319 Speaker 3: when you get in the middle market in the upper end, 36 00:01:36,319 --> 00:01:38,560 Speaker 3: you start to see there's a soft level of softast 37 00:01:38,640 --> 00:01:41,199 Speaker 3: loan demand because of opportunity and cost the beer point 38 00:01:41,360 --> 00:01:43,720 Speaker 3: the cost of borrowings higher and the opportunity what to 39 00:01:43,720 --> 00:01:45,840 Speaker 3: do with the money with economic certainty hire. But you 40 00:01:45,880 --> 00:01:49,639 Speaker 3: put that together, we believe that I would trough this quarter. 41 00:01:49,840 --> 00:01:51,880 Speaker 3: We called that we should have bridged. Where it goes 42 00:01:51,920 --> 00:01:54,960 Speaker 3: from thirteen point nine billion this quarter to fourteen point 43 00:01:54,960 --> 00:01:57,120 Speaker 3: five billion in the fourth quarter, and we showed the 44 00:01:57,160 --> 00:01:59,120 Speaker 3: steps to get there, which I think gave the market 45 00:01:59,160 --> 00:02:01,520 Speaker 3: confidence that part of this requires a little bit of 46 00:02:01,560 --> 00:02:04,520 Speaker 3: growth and loans and deposits continue discipline and pricing, and 47 00:02:04,560 --> 00:02:07,040 Speaker 3: a lot of it comes from mechanical repricing of assets 48 00:02:07,040 --> 00:02:09,440 Speaker 3: that are rolling off their fixed rate and having repriced 49 00:02:09,919 --> 00:02:11,560 Speaker 3: to current rate structures. 50 00:02:11,760 --> 00:02:14,120 Speaker 2: Yeah, and those mechanical things you're reasonably certain of as 51 00:02:14,120 --> 00:02:15,680 Speaker 2: far as much as you can be. But when you 52 00:02:15,680 --> 00:02:18,400 Speaker 2: talk about growing, for example, small and medium sized business loan, 53 00:02:18,840 --> 00:02:20,880 Speaker 2: is that what I would call organic growth. Is that 54 00:02:21,240 --> 00:02:24,640 Speaker 2: more customers or is it current customers actually borrowing more. 55 00:02:24,880 --> 00:02:28,399 Speaker 3: Well, it's both, but it's probably weighted in the small 56 00:02:28,440 --> 00:02:31,880 Speaker 3: business area to more customers. Now in the middle market area, 57 00:02:32,760 --> 00:02:35,720 Speaker 3: it's driven a little bit by line usage the percentage. 58 00:02:35,280 --> 00:02:37,639 Speaker 1: Drawn on the line on average, and that's our average loans. 59 00:02:37,680 --> 00:02:40,040 Speaker 3: And so it's small business we're adding customers, and middle 60 00:02:40,040 --> 00:02:43,520 Speaker 3: market writing customers, and in large corporate really people don't 61 00:02:43,600 --> 00:02:46,200 Speaker 3: use their lines much in the markets being strong for 62 00:02:46,240 --> 00:02:49,320 Speaker 3: fixed income underwriting take the assets away from it. So 63 00:02:50,320 --> 00:02:53,280 Speaker 3: it's across all that. So if you look at small business, 64 00:02:53,440 --> 00:02:57,400 Speaker 3: they are our activity. IU New borrowers is high. We 65 00:02:57,440 --> 00:03:00,280 Speaker 3: have a big practice lending to dentists and doctor and 66 00:03:00,280 --> 00:03:02,720 Speaker 3: that's been growing pretty well. And we have you know, 67 00:03:02,840 --> 00:03:05,520 Speaker 3: just the general small business small business credit card, which 68 00:03:05,560 --> 00:03:07,480 Speaker 3: is to use to do their operational stuff, a business 69 00:03:07,480 --> 00:03:08,120 Speaker 3: credit card. 70 00:03:07,919 --> 00:03:09,480 Speaker 1: And small business you can see that growing. 71 00:03:09,840 --> 00:03:13,320 Speaker 3: But middle market line draws are basically relatively bouncing around 72 00:03:13,560 --> 00:03:16,600 Speaker 3: at a level that is still about five percentage points 73 00:03:16,639 --> 00:03:19,239 Speaker 3: below where it was pre pandemic, which means that is 74 00:03:19,280 --> 00:03:22,119 Speaker 3: cost of barring what. People aren't being quite as aggressive 75 00:03:22,120 --> 00:03:24,240 Speaker 3: and that's why the economy is slowing down. They're not 76 00:03:24,320 --> 00:03:26,040 Speaker 3: hiring quite as many people, they're not buying that piece 77 00:03:26,080 --> 00:03:26,560 Speaker 3: of equipment. 78 00:03:26,600 --> 00:03:27,560 Speaker 1: They're not doing it because they're a. 79 00:03:27,520 --> 00:03:30,639 Speaker 3: Little worried about final demand and therefore to being careful, 80 00:03:30,960 --> 00:03:33,680 Speaker 3: which is unpleasant for your bank. But it's okay because 81 00:03:33,680 --> 00:03:35,600 Speaker 3: the companies don't make them profitable and the credit quality 82 00:03:35,640 --> 00:03:35,880 Speaker 3: is good. 83 00:03:36,000 --> 00:03:37,880 Speaker 2: Yeah, and the fact needs to slow down a bit, 84 00:03:37,920 --> 00:03:40,320 Speaker 2: be given. We're inflash at the same time from where 85 00:03:40,320 --> 00:03:42,240 Speaker 2: you say, because you have such a vantage point into this, 86 00:03:43,000 --> 00:03:44,920 Speaker 2: is that a straight line that's going down? Do you 87 00:03:44,960 --> 00:03:46,480 Speaker 2: see it leveling off or is. 88 00:03:46,440 --> 00:03:47,720 Speaker 1: It it's a flat line. 89 00:03:47,720 --> 00:03:52,440 Speaker 3: So loans grew a first quarter, second quarter a few 90 00:03:52,480 --> 00:03:54,560 Speaker 3: billion dollars on a tree and fifty base, you know, 91 00:03:54,640 --> 00:03:55,480 Speaker 3: so say eight billions. 92 00:03:55,520 --> 00:03:56,440 Speaker 1: So they grew a little bit. 93 00:03:56,480 --> 00:03:58,960 Speaker 3: All the business lines grew loans, but the wealth management 94 00:03:59,000 --> 00:04:01,880 Speaker 3: business grew faster, which is good because you know, wealthy people, 95 00:04:01,880 --> 00:04:03,720 Speaker 3: as their asset base goes up, tend to use it 96 00:04:03,760 --> 00:04:05,960 Speaker 3: to do something a little more faster than a corporate might. 97 00:04:06,680 --> 00:04:08,720 Speaker 1: There's not a lot of leverage finance going on. There's some, 98 00:04:08,920 --> 00:04:09,240 Speaker 1: not a. 99 00:04:09,160 --> 00:04:11,800 Speaker 3: Lot because deals, the higher prices and multiples and getting 100 00:04:11,800 --> 00:04:12,320 Speaker 3: it all straight. 101 00:04:12,360 --> 00:04:13,760 Speaker 1: That'll work itself through the system. 102 00:04:13,760 --> 00:04:15,600 Speaker 3: And you have a lot of people on your show 103 00:04:15,720 --> 00:04:19,480 Speaker 3: who are private equity colleagues that you know they're sitting 104 00:04:19,520 --> 00:04:21,120 Speaker 3: there saying, you know, I've got lots of money. 105 00:04:21,160 --> 00:04:23,159 Speaker 1: I can't find the deals at the right price. That's 106 00:04:23,200 --> 00:04:23,440 Speaker 1: the key. 107 00:04:23,480 --> 00:04:25,200 Speaker 3: At the right price, I can find deals. And so 108 00:04:25,600 --> 00:04:27,719 Speaker 3: that's a little bit muted. But if you look across 109 00:04:27,720 --> 00:04:31,080 Speaker 3: the board, it's it's solid, growing a bit, but growing 110 00:04:31,120 --> 00:04:33,880 Speaker 3: consistent with the lower growth two percent type growth, lower 111 00:04:33,880 --> 00:04:37,720 Speaker 3: inflation economy. It's not growing as fast as it was coming. 112 00:04:37,960 --> 00:04:39,760 Speaker 3: You know, the pandemic shot up, went down and started 113 00:04:39,760 --> 00:04:42,479 Speaker 3: growing faster. Same with the posits went up and drained 114 00:04:42,520 --> 00:04:45,440 Speaker 3: down or stable. The activity is kind of normalizing now 115 00:04:45,520 --> 00:04:48,039 Speaker 3: and that's where I think the risk of the next 116 00:04:48,080 --> 00:04:50,520 Speaker 3: turn in the track is actually getting the timing right 117 00:04:50,800 --> 00:04:54,760 Speaker 3: to bring the rates down to create a little more 118 00:04:55,240 --> 00:04:57,400 Speaker 3: accommodation in the system, are a little less restriction. 119 00:04:57,640 --> 00:04:59,080 Speaker 2: What are you rejecting on the rate cuts? 120 00:04:59,400 --> 00:05:00,839 Speaker 1: Are companies? Projection? 121 00:05:00,880 --> 00:05:03,120 Speaker 3: Our research team which is terrific Canadas Bounding Plant and 122 00:05:03,160 --> 00:05:07,040 Speaker 3: Research team, the best arsearch TUM has really won this year. 123 00:05:07,400 --> 00:05:09,440 Speaker 3: They had just in their last report said we're probably 124 00:05:09,440 --> 00:05:11,880 Speaker 3: going to come off of that. So, like they usually do, 125 00:05:12,000 --> 00:05:13,039 Speaker 3: they I get on TV the. 126 00:05:13,040 --> 00:05:15,160 Speaker 1: Next day they change it. But the markets at three 127 00:05:15,200 --> 00:05:17,320 Speaker 1: were one somewhere and that was where they'll come out, 128 00:05:17,400 --> 00:05:17,840 Speaker 1: is my guess. 129 00:05:17,880 --> 00:05:19,360 Speaker 2: But maybe more important that is where do you think 130 00:05:19,360 --> 00:05:21,479 Speaker 2: we end up? Because that's the question. We could do 131 00:05:21,520 --> 00:05:23,839 Speaker 2: it this year, next year, but where's the long term 132 00:05:23,839 --> 00:05:24,800 Speaker 2: interest it's going to end out? 133 00:05:24,800 --> 00:05:27,240 Speaker 3: So if you think across time here, that's what's important 134 00:05:27,360 --> 00:05:30,279 Speaker 3: is that our teammates think that we end up around 135 00:05:30,279 --> 00:05:32,839 Speaker 3: three and a half and that's where the FED stops. 136 00:05:33,120 --> 00:05:35,320 Speaker 3: That is a wholly different environment than the last fifteen 137 00:05:35,360 --> 00:05:38,279 Speaker 3: twenty years, where you know, basically there was no interest 138 00:05:38,360 --> 00:05:42,800 Speaker 3: rate got up in sixteen, seventeen, seventeen, eighteen nineteen to two. 139 00:05:42,680 --> 00:05:43,839 Speaker 1: And a half, and then it was cut. 140 00:05:43,920 --> 00:05:46,479 Speaker 3: If people forget at the end of nineteen, we never 141 00:05:46,520 --> 00:05:48,760 Speaker 3: got back to quote a normal rate environment that you 142 00:05:48,760 --> 00:05:50,880 Speaker 3: would have seen in our early careers for years, David, 143 00:05:50,960 --> 00:05:52,680 Speaker 3: where the Fed funds was three and a half are 144 00:05:52,760 --> 00:05:53,480 Speaker 3: sometimes even. 145 00:05:53,320 --> 00:05:55,359 Speaker 1: A lot higher. Ten yure rate was four and a half. 146 00:05:55,400 --> 00:05:58,359 Speaker 3: That normalized rate is where our teammates think it gets to. 147 00:05:58,400 --> 00:06:00,760 Speaker 3: And Cannas and our team's saying, look, they bring inflation 148 00:06:00,880 --> 00:06:04,160 Speaker 3: down and then they'll stop. Because the core underligne growth dynamics. 149 00:06:04,160 --> 00:06:06,720 Speaker 3: The amount of money in the system, the fiscal borrowing 150 00:06:06,720 --> 00:06:09,720 Speaker 3: that went on is still being deployed, the IRA, the 151 00:06:09,720 --> 00:06:12,039 Speaker 3: Infrastructure Act, all this stuff going on is going to 152 00:06:12,080 --> 00:06:13,479 Speaker 3: still be coming through the system. 153 00:06:13,600 --> 00:06:14,480 Speaker 1: A lot of it's not spent. 154 00:06:14,600 --> 00:06:17,600 Speaker 3: It's being spent that will create you know, you know, 155 00:06:18,120 --> 00:06:21,280 Speaker 3: demand and things like that. Therefore, there's probably going to 156 00:06:21,279 --> 00:06:23,320 Speaker 3: be a little more inflation pressure, but it would be 157 00:06:23,360 --> 00:06:24,920 Speaker 3: good for America if we ended up in a more 158 00:06:24,920 --> 00:06:28,200 Speaker 3: normal rate structure in a growing economy. You know that 159 00:06:28,320 --> 00:06:30,960 Speaker 3: three and a half didn't become too restrictive. That would 160 00:06:30,960 --> 00:06:33,839 Speaker 3: be good because that's a much sort of healthier place 161 00:06:33,839 --> 00:06:34,680 Speaker 3: for us to be over time. 162 00:06:34,760 --> 00:06:36,320 Speaker 2: At the same time, if we're three and a half 163 00:06:36,360 --> 00:06:38,159 Speaker 2: is where we're ending up, let's assume there for a second. 164 00:06:38,360 --> 00:06:40,360 Speaker 2: That suggests that where the fit is now is maybe 165 00:06:40,400 --> 00:06:41,919 Speaker 2: not as restrictive as some people think it is. 166 00:06:42,240 --> 00:06:44,200 Speaker 3: Yeah, and there's great debate about our star and a 167 00:06:44,279 --> 00:06:46,720 Speaker 3: naturally the long term rate at which the economists can 168 00:06:46,720 --> 00:06:49,200 Speaker 3: go on, But I think they're restricting. When you hear 169 00:06:49,240 --> 00:06:52,000 Speaker 3: from clients, they're saying, hey, it's costing me what used 170 00:06:52,000 --> 00:06:54,200 Speaker 3: to cost me, you know, two hundred basis points over 171 00:06:54,240 --> 00:06:56,560 Speaker 3: fifty basis points or three hundred bas points over fifty 172 00:06:56,600 --> 00:06:58,400 Speaker 3: base points three and a half percent is now three 173 00:06:58,440 --> 00:07:00,200 Speaker 3: hundred basis points over five and a half eight and 174 00:07:00,240 --> 00:07:02,960 Speaker 3: a half percent. You know, they're like, so it has 175 00:07:02,960 --> 00:07:05,359 Speaker 3: a restrictive effect. They've got to slow that down. And 176 00:07:05,360 --> 00:07:07,080 Speaker 3: that's why you're seeing the barring demand come down and 177 00:07:07,160 --> 00:07:09,960 Speaker 3: deployment of that barring. You're seeing consumer movement of money 178 00:07:09,960 --> 00:07:13,320 Speaker 3: in our franchise come more consistent with a lower growth, 179 00:07:13,320 --> 00:07:15,760 Speaker 3: low inflation economy. All that is going on, and that's 180 00:07:15,800 --> 00:07:18,000 Speaker 3: where the next turn in the track is a trickier one. 181 00:07:18,520 --> 00:07:21,680 Speaker 3: They've put inflation right path where you know, what's the 182 00:07:21,680 --> 00:07:24,000 Speaker 3: debate about too far or not far enough? And that's 183 00:07:24,000 --> 00:07:25,560 Speaker 3: going to be what the market's going to eb and 184 00:07:25,640 --> 00:07:26,480 Speaker 3: flow on a give a day. 185 00:07:26,640 --> 00:07:28,560 Speaker 2: So what about the cost of funding for you for 186 00:07:28,640 --> 00:07:29,840 Speaker 2: your deposits because you don't have to. 187 00:07:29,840 --> 00:07:31,560 Speaker 1: Spend some two are three basis points. 188 00:07:31,680 --> 00:07:35,600 Speaker 2: But I read some accounts in some places people are rotating, 189 00:07:35,600 --> 00:07:37,679 Speaker 2: as they say, in the higher yield products, which costs 190 00:07:37,760 --> 00:07:40,440 Speaker 2: presumably Bank of American others more money. Are you seeing 191 00:07:40,440 --> 00:07:43,200 Speaker 2: that rotation? Do you see it tapering off or ending? 192 00:07:43,520 --> 00:07:46,560 Speaker 3: It's so we showed some pages today. It's kind of 193 00:07:46,800 --> 00:07:48,600 Speaker 3: It depends on the business and the use of money. 194 00:07:48,960 --> 00:07:51,240 Speaker 3: If you look at the core consumer business, the rate 195 00:07:51,280 --> 00:07:54,480 Speaker 3: paid really reflects a huge amount of non interest checking 196 00:07:54,520 --> 00:07:56,960 Speaker 3: as a percentage. So it's a mix of it's a 197 00:07:57,000 --> 00:07:58,560 Speaker 3: mix of what the customer users the money for. You 198 00:07:58,560 --> 00:08:00,560 Speaker 3: go to the investment business, we're still seeing a little 199 00:08:00,600 --> 00:08:01,360 Speaker 3: bit of rate increase. 200 00:08:01,560 --> 00:08:02,440 Speaker 1: You go in the. 201 00:08:04,400 --> 00:08:09,400 Speaker 3: Customer the client business, the banking business, global banks, corporate customers. Basically, 202 00:08:09,520 --> 00:08:10,920 Speaker 3: the year of a year, the quarter of a quarter 203 00:08:11,000 --> 00:08:13,320 Speaker 3: change is next to nothing because it basically priced up 204 00:08:13,320 --> 00:08:15,760 Speaker 3: to the difference between it and the Fed funds rate 205 00:08:15,800 --> 00:08:17,800 Speaker 3: and sitting there. So it really is business and how 206 00:08:17,800 --> 00:08:21,840 Speaker 3: the customers in the money. We sort it by transactional money. 207 00:08:21,600 --> 00:08:22,520 Speaker 1: And investment money. 208 00:08:22,920 --> 00:08:25,760 Speaker 3: And then if the customer is in transaction money, that 209 00:08:25,800 --> 00:08:27,240 Speaker 3: money is moving around. They don't see it in the 210 00:08:27,280 --> 00:08:29,200 Speaker 3: investment money. They're making a discrete decision to want to 211 00:08:29,280 --> 00:08:30,440 Speaker 3: leave it with you or to want to put it 212 00:08:30,640 --> 00:08:33,440 Speaker 3: in a money market account. And that's where you saw 213 00:08:33,480 --> 00:08:35,120 Speaker 3: some of the movement happen. And that's what's been going 214 00:08:35,120 --> 00:08:37,679 Speaker 3: on in wealth management business across all our platform to 215 00:08:37,800 --> 00:08:40,120 Speaker 3: positive growing for the last four or five quarters, ever 216 00:08:40,200 --> 00:08:43,000 Speaker 3: so slowly, which means the stability and pricing is there 217 00:08:43,040 --> 00:08:46,520 Speaker 3: because the rate increases link quarters ten to twelve basis points, 218 00:08:46,559 --> 00:08:47,880 Speaker 3: which is really just a little bit of mixture. 219 00:08:48,280 --> 00:08:50,760 Speaker 2: You have a unique perspective on the consumer, us consumer. 220 00:08:50,800 --> 00:08:52,800 Speaker 2: Give us your take right now. On the consumer. I 221 00:08:52,840 --> 00:08:56,080 Speaker 2: see in your numbers, you're taking more provisions than you were, 222 00:08:56,160 --> 00:08:58,600 Speaker 2: you have more charge you offs. Do you see that continuing? 223 00:08:59,000 --> 00:09:01,000 Speaker 3: So if you talk about it from a credit standpoint, 224 00:09:02,240 --> 00:09:04,280 Speaker 3: a credit card charge of right for cards was like 225 00:09:04,320 --> 00:09:06,480 Speaker 3: three point eight eight I think this quarter or something 226 00:09:06,480 --> 00:09:06,800 Speaker 3: like that. 227 00:09:07,480 --> 00:09:10,000 Speaker 1: We underwrite to stay under four and a half in 228 00:09:10,040 --> 00:09:10,760 Speaker 1: normal times. 229 00:09:11,720 --> 00:09:13,959 Speaker 3: So the point is that it's just been coming back 230 00:09:14,040 --> 00:09:16,679 Speaker 3: up to the level that it was in prior periods. 231 00:09:16,720 --> 00:09:18,240 Speaker 3: It's a little bit higher it was in nineteen, but 232 00:09:18,280 --> 00:09:20,199 Speaker 3: those are very I was like a fifty year credit 233 00:09:20,240 --> 00:09:22,000 Speaker 3: low in company's history. 234 00:09:22,240 --> 00:09:25,079 Speaker 1: So it's normalized, but the rate of increase is interesting. 235 00:09:25,120 --> 00:09:25,520 Speaker 1: Year of the year. 236 00:09:25,520 --> 00:09:27,400 Speaker 3: I think it's up eighty basis points or you know, 237 00:09:27,480 --> 00:09:28,959 Speaker 3: and so everybody's like, oh my gosh, but it's just 238 00:09:29,000 --> 00:09:31,360 Speaker 3: getting back. So what we showed today is that we 239 00:09:31,400 --> 00:09:34,240 Speaker 3: showed the early stage of linquency, what they call five 240 00:09:34,280 --> 00:09:35,640 Speaker 3: stage or thirty. 241 00:09:35,400 --> 00:09:37,240 Speaker 1: Day day delinquency and ninety day delinquacy. 242 00:09:37,240 --> 00:09:39,199 Speaker 3: Its basically flattened out, which means the second half of 243 00:09:39,240 --> 00:09:41,400 Speaker 3: the year you'll see the charge offs flat now, which 244 00:09:41,400 --> 00:09:44,520 Speaker 3: means we've reached normal four percent. So from credit, they're 245 00:09:44,520 --> 00:09:44,960 Speaker 3: doing well. 246 00:09:45,520 --> 00:09:48,480 Speaker 2: We haven't mentioned trading. You had quite a report on 247 00:09:48,480 --> 00:09:51,400 Speaker 2: your equity trading. You're really doing terribly well. What do 248 00:09:51,440 --> 00:09:52,800 Speaker 2: you do to keep that going? Are you going to 249 00:09:52,840 --> 00:09:53,520 Speaker 2: invest more in it? 250 00:09:53,880 --> 00:09:58,200 Speaker 3: We continue to invest along three dimensions technology. Jim Tomorrow 251 00:09:58,200 --> 00:09:59,600 Speaker 3: the team run it, and they've done a great job. 252 00:10:00,000 --> 00:10:02,280 Speaker 3: So five seven years ago he made the decision to 253 00:10:02,280 --> 00:10:06,440 Speaker 3: give more more capabilities, technology, the balance sheet that they 254 00:10:06,440 --> 00:10:09,480 Speaker 3: can use to help their customers achieve their goals and talent, 255 00:10:09,600 --> 00:10:12,520 Speaker 3: and so Jimmy across the board continues to increase and so. 256 00:10:12,559 --> 00:10:13,440 Speaker 1: We feel good about it. 257 00:10:13,679 --> 00:10:17,920 Speaker 3: He made a billion four after taxes quarter, which is. 258 00:10:17,800 --> 00:10:19,280 Speaker 1: A very strong learnings quarter. 259 00:10:19,320 --> 00:10:21,280 Speaker 3: But what's happening is you're seeing back to back billion 260 00:10:21,320 --> 00:10:23,560 Speaker 3: dollar plus quarters where used to be a billion dollars 261 00:10:23,600 --> 00:10:25,719 Speaker 3: plus and drop to five hundred when the markets slowed down. 262 00:10:25,760 --> 00:10:28,160 Speaker 3: You're seeing much more stability to break even point in 263 00:10:28,160 --> 00:10:30,719 Speaker 3: the businesses on a relative basis, much lower. The best 264 00:10:30,760 --> 00:10:33,599 Speaker 3: second quarter they've had since I think twenty twelve or 265 00:10:33,640 --> 00:10:35,360 Speaker 3: something like that, which a lot of that was just 266 00:10:35,400 --> 00:10:37,320 Speaker 3: when assets were marked up and came back to the 267 00:10:37,360 --> 00:10:40,960 Speaker 3: system of profit. They've done a great job and Tom 268 00:10:40,960 --> 00:10:43,880 Speaker 3: Montag six seven years ago started this, Jimmy took it over, 269 00:10:43,920 --> 00:10:45,920 Speaker 3: has done a spectacle job of implementing it, and we 270 00:10:45,920 --> 00:10:49,600 Speaker 3: feel confident we'll keep giving them more r WA bersuaded assets, 271 00:10:49,679 --> 00:10:53,440 Speaker 3: balance sheet capital and investment in technology because that's obviously 272 00:10:53,679 --> 00:10:58,160 Speaker 3: very expensive business to run from a day day basis. 273 00:10:57,880 --> 00:10:59,560 Speaker 2: Right, I know, you want to grow all the business 274 00:10:59,520 --> 00:11:00,920 Speaker 2: at back of the America, But do you have a 275 00:11:00,960 --> 00:11:03,160 Speaker 2: strategy about the balance between what I would think was 276 00:11:03,200 --> 00:11:06,280 Speaker 2: a traditional bank lending interest receipts as opposed to the 277 00:11:06,360 --> 00:11:08,880 Speaker 2: fee side, whether it's investment banking or as a manager, 278 00:11:09,000 --> 00:11:10,840 Speaker 2: are you rebalancing the bank? 279 00:11:11,200 --> 00:11:14,440 Speaker 3: Well, this quarter happened to be half the earnings were 280 00:11:14,440 --> 00:11:17,640 Speaker 3: from people, half the earnings for institutions. Out of twenty 281 00:11:17,640 --> 00:11:21,720 Speaker 3: five billion of revenue, fourteen was spread revenue and eleven 282 00:11:21,880 --> 00:11:26,240 Speaker 3: was round numbers. Is feed revenue because the market dictates 283 00:11:26,240 --> 00:11:26,560 Speaker 3: a lot. 284 00:11:26,480 --> 00:11:27,240 Speaker 1: Of feed revenues. 285 00:11:27,280 --> 00:11:28,440 Speaker 3: We could do it, but if you think about it 286 00:11:28,480 --> 00:11:30,840 Speaker 3: from the businesses. In the consumer business, we made a 287 00:11:30,880 --> 00:11:33,880 Speaker 3: decided decision to lower feed burdens on customers and a 288 00:11:33,920 --> 00:11:36,680 Speaker 3: trade off for that was long term customer favorability run 289 00:11:36,720 --> 00:11:40,680 Speaker 3: eight percent across all the platform engagement places, the brand 290 00:11:41,200 --> 00:11:43,560 Speaker 3: favorability into seventy percent, up twenty points over the last 291 00:11:43,600 --> 00:11:46,720 Speaker 3: ten years. So we made a decision lower the fee burden, 292 00:11:47,160 --> 00:11:49,200 Speaker 3: but get it paid back and transaction accounts those are 293 00:11:49,240 --> 00:11:52,120 Speaker 3: these zero interest deposits that's worked wonderfully. 294 00:11:52,160 --> 00:11:54,160 Speaker 1: So we grow a million counts in a year. 295 00:11:54,440 --> 00:11:56,400 Speaker 3: They started two or three thousand dollars, they mature to 296 00:11:56,440 --> 00:11:57,559 Speaker 3: seven to ten thousand dollars. 297 00:11:58,080 --> 00:11:59,960 Speaker 1: It's all you know, zero interest rate money. 298 00:12:00,160 --> 00:12:02,400 Speaker 3: It's very strong and that's if it's a young kids, 299 00:12:02,520 --> 00:12:04,520 Speaker 3: the customer of the future, and that's what we're doing. 300 00:12:04,840 --> 00:12:07,920 Speaker 3: So that balance and fees there and wealth manage it's 301 00:12:07,960 --> 00:12:10,679 Speaker 3: all gonna be about feed driven. It has, but the 302 00:12:11,120 --> 00:12:14,520 Speaker 3: incremental growth seven percent increase in fees your view, that's 303 00:12:14,520 --> 00:12:16,800 Speaker 3: what we're driving there. Jimmy has a mix and the 304 00:12:16,920 --> 00:12:20,520 Speaker 3: trading business and then you know, and then the commercial 305 00:12:20,559 --> 00:12:23,439 Speaker 3: business is actually balanced investment banking fees which everybody talks 306 00:12:23,440 --> 00:12:25,920 Speaker 3: about a billion and six, but the whole revenue business 307 00:12:26,160 --> 00:12:29,559 Speaker 3: dominated by lending and deposits for corporate customers. So you 308 00:12:29,679 --> 00:12:31,880 Speaker 3: have to keep your heads on and there's no we'd 309 00:12:31,920 --> 00:12:33,400 Speaker 3: never say if it's this, we're happy. If it's not, 310 00:12:33,480 --> 00:12:35,079 Speaker 3: we're happy. We want to grow all aspects of it. 311 00:12:35,800 --> 00:12:38,080 Speaker 2: Right, and thank you so very much. That's brought back 312 00:12:38,120 --> 00:12:39,760 Speaker 2: to America's Brian moynihan.