Bank of America CEO Brian Moynihan sounded optimistic Wednesday about a US economic recovery and discussed his plan to improve the company’s stock price.
“What we need to do is to continue to fine-tune the company, give capital ratios where people understood that we had the capital we knew we had. And then they saw that and that’s why you saw some response in the stock,” he said in a wide-ranging interview from the World Economic Forum in Davos, Switzerland. “The core issue now is to drive the core earnings, and we’ve got to get the costs down in the company, which we’re working on. And then as the economy continues to move along, even at the 2 percent growth level, we’ll start to materialize more and more earnings, and that’s what we need to do.”
Bank of America has seen a 46 percent decline in its stock price over the past year, as it met with such challenges as a customer revolt over a $5 debit card fee, litigation in its housing division and increasing regulation.
Moynihan previously said the fee, which drove customers away before it was reversed, was necessary to comply with Dodd-Frank.
“We generate a million new checking accounts a quarter, and we did that last quarter,” Moynihan told CNBC’s Maria Bartiromo on “Fast Money.”
“Our job is to do what we do: Provide great service, provide great access and convenience that no one else can provide, provide great innovation. We have 9 million mobile phone customers today, we send out 25 million texts a month to help people manage their finances,” he said. “What will happen is, as the atmosphere around our institution and all institutions in financial services get better and we continue to show customers we do what they need us to do, it’ll come back.”
Moynihan also spoke about the housing sector of Bank of America’s business, estimating that it would take a couple of years to work through its inventory of housing, either through restructuring mortgages, short sales and foreclosures.
But he saw the market stabilizing from the precipitous drops in home values.
“The first 40 percent in housing was pretty tough to take for all of us. Whether it goes up and down 1 percent or 2 percent now is not as important, but you’re seeing the fundamentals move forward,” he said. “Markets are moving. Inventories are moving. The inventory’s clearing.”
Moynihan said the company wanted to get to a situation where it did not need “to rely on government-sponsored agencies or others for liquidity for our customers.”
As part of the three-year “Project New BAC,” the company has been working to cut costs, improve its balance sheet and increase earnings.
Moynihan said he expects positive results from the federal “stress tests” for banks.
“Last time we did this last year, we’re about 8.6 percent capital. Now we’re at 9.86 percent, so we have a lot more capital,” he said. “We’ve taken a lot of risk off, managed the size of the company down.”
Bank of America, he added, was refocusing its core businesses.
“We started a couple of years ago getting out of the private equity business, which under Basel III is a heavy capital tax,” he said. “We were doing this because we think it’s the right way to run the company — smaller, more streamlined, every ounce of strength going for the customers we have and delivering the products. And we make money because of what we do for customers, not that we’re doing a lot of proprietary trading.”
Bank of America shares closed at $7.35, up 0.8 percent.
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Trader disclosure: On Jan. 25, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns C; Adami owns GS; Adami owns INTC; Adami owns AGU; Adami owns MSFT; Weiss is long UGL; Weiss is long ETP; Weiss is long WLP; Weiss is long QCOM; Weiss is long BRCM; Weiss is long EUO
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