Economy Stable, Credit Demand Still Low: BofA CEO


The economy is stabilizing but credit demand is still low because companies are not yet expanding their activities at a fast pace, Bank of America CEO Brian Moynihan told CNBC Friday.

"We are seeing a little more business activity, which is very good for the economy and very good for our company," Moynihan told "Squawk Box." (See video below)

Bank of America's results blew past forecasts earlier in the day, when the bank posted earnings per share of 28 cents versus estimates of just 9 cents, due to the strength of its capital markets business.

The bank extended between $145 billion and $150 billion in credit this quarter, but when it comes to increased loan demand, "broadly speaking, we're not seeing it," Moynihan said.

"Customers don't see the need to borrow, they aren't hiring, they aren't building inventories," he explained, but added, "I think they're feeling better now."

The US housing sector is "grinding through" towards stability, but it is still affecting the bank's results, according to Moynihan.

"Our mortgage business is still the one we have to get over the hump," he said.

Commercial Real Estate Better

Bank of America offered $70 billion in first mortgages and $10 billion in commercial real estate loans during the first quarter.

The office market has begun to stabilize and it has better prospects than the residential one, the bank's CEO said.

BofA CEO Breaks Down Earnings

A proposal floated around by analysts that forgiving the principal on delinquent loans was the only way to stop the losses caused by the crisis is not likely to work in all cases, Moynihan said.

"We've announced in the last week and half or so that we'll do it (forgive principal) on certain type of loans. I'm not sure that's the solution in a broader context," he said.

He dismissed proposals to bring back the Glass-Steagall Act, which separated investment banking from commercial banking after the 1930s Depression and was repealed more than 10 years ago.

"If America wants a competitive financial services industry, we have to be careful about dividing it up," Moynihan said.

The bank's acquisition of Merrill Lynch in 2008 is showing positive results, he also said.

The core integration process is still going on, but it the cultural sense, the teams are working together and the process came together well, he said.