BofA CEO Moynihan on Affordability, Lending and AI Spending

Added: 2026-06-03

[00:00:00]Brian, thank you so much for sitting down with me.

[00:00:02]It's great to be here, Danny. And I just want to start one of the things you've been very consistent on so far this year, whether it be conferences or in your earnings, just the strength of the consumer and the strength on your platform. Spending on credit and debt up 6% year over year. And yet gasoline prices are high.

[00:00:17]Consumer confidence is at rock bottom. If those types of things can't break the consumer, then what, if anything, can at this point?

[00:00:25]So I think just to give the stats, you're about $2 trillion because from our consumers in the economy every year you're, excuse me, about $5 trillion of your dates for 2 trillion plus grown at 5% in the aggregate debit card, a car a little faster and it's going everywhere. Now, when you watch for then that, you start to see that your point about what consumers do, they're going to the gas station more times and spending a lower amount because they from budgetary, uh, basis, they want to spend that much, but they're still buying more in entertainment. It's up 13% year over year in the month of May. And so it's a little bit of conundrum.

[00:00:58]And why is that true? Go back to your question.

[00:01:00]What would break them there at uh unemployment fourth point 3% job formation not as strong as theoretical numbers, but for the population growth, it's actually pretty strong. You have 60 70,000 jobs a month.

[00:01:12]And so our team thinks will grow at 2.1% this year.

[00:01:15]And people say, well, you're optimistic. I'm saying I'm telling you what the consumer is doing today. But what they say they're going to do will come true if job cuts really come through that lower levels of employment right now, while these job cuts are open positions and attrition and things like that, they're not necessarily huge layoffs that are actually effectively affecting because job numbers are going up.

[00:01:35]Well, I know in your earnings, you also noted, I think spending on gasoline was something up like 16%, 27%, okay, 27%. Is that something you're keeping an eye on? We'll keep an eye on it if you sort it by, uh, low, medium and high income earning households.

[00:01:48]It obviously has about twice the impact of a, uh, lower and lower third of income households than it does a medium the higher.

[00:01:56]And so that's where you have to watch and make sure that they are able to carry that. And that's the people go to the gas station more often still spending the $40 so they don't get as much gas for it, but they go more often and they ration how they spend it to go to the, uh, places for gas? Cheaper?

[00:02:11]Let's just say that. And you can see people changing, micro changing. They'll they're going a little bit more to big box retailers. Little more second hand stores and all that adjustments. Part of the kind of what we talk about.

[00:02:21]But the reality is the incomes are growing for all those income segments.

[00:02:24]And so affordability is a real issue. But to fundamentally change affordability we have to build more housing.

[00:02:29]So there's the supply pressure to bring the prices down.

[00:02:32]Uh, affordability, gas prices at $4.50 to a or above.

[00:02:38]We've been there before. So it is affordable.

[00:02:40]It's just not pleasant. Someone once made the comment to me, Meredith Whitney, as a matter of fact, basically said, a lot of people are leaving the banking system that are especially on the lower income scale.

[00:02:48]They're turning to things like payday loans.

[00:02:51]She brought up the term shadow banking. I wonder if there is, or if you are concerned that maybe there is unseen stress in the system that has left the likes of a Bank of America. When you look at the like the recent fed data on consumer credit, the reality is, is that there are pockets of, uh, delinquencies that are a little higher for subprime credit.

[00:03:09]We as a company don't do that business, and our credit's as good as it has been in 50 years on the consumer side is getting a little better.

[00:03:16]The flip of that, though, is we offer a set of products, a no overdraft account where you can't overdraft because you don't have cheques, frankly.

[00:03:23]And what you do is automated payments. We have a $5 a month account.

[00:03:26]We have a $500 loan where you pay no interest, no fees.

[00:03:30]You just have to pay it back. You can borrow it a couple times a year.

[00:03:32]So we're always working on affordability of our products.

[00:03:35]And our overdraft fees are $10 versus a market of 35 for those that choose to have overdraft. So we have an affordability package in banking the second to none. And if you look at our consumers from the spending side, they look like everyone else.

[00:03:48]From the borrowing side, we tend to be more of a prime lender.

[00:03:50]So you'll see some pockets. But even those pockets, if you look at some of our peer companies that are in those businesses, the delinquencies are fine right now. I'm very worried about what happens next, but it all comes down to unemployment and people being employed and earning money. Well, the other side of the economy that's going absolutely gangbusters is is everything.

[00:04:07]And I and it's really impacting capital markets.

[00:04:09]And Bank of America is very involved in a lot of these deals, whether it be blockbuster IPO's, alphabet looking at raising equity, upping their amount from 80 to 85 billion. I wonder what impact you think that happens on the market, just because of the sheer amount of capital and things that are being issued? Is this something that the market can absorb and can absorb smoothly? Well, it's absorbed it smoothly so far.

[00:04:33]And the debate will be whether at some point, the revenue and the earnings multiples in the cash flow of all tools, all have to come in sync.

[00:04:41]And right now you're in that phase where there's a massive amount of capacity building and anticipated of demand. And so when you look at it, one of the ways that we think about it is we are a buyer of these services and a big buyer.

[00:04:52]$13 billion in technology year, 350 million this year and 26 on eye related spending. And so the question is what's the affordability that that will be the answer, the question how this comes together. But right now it's a heck of a stimulus, an economy that going on. But the other part of the economy that we see is the small and medium sized businesses.

[00:05:09]And it's interesting they, as you think about them over the last year, last year we had Liberation Day and that was confusing for people.

[00:05:16]And then we had the tax law finally got done.

[00:05:19]That settled confusion and had trading. Then you had immigration policy that confused people. Deregulation.

[00:05:24]They look for that. As you watched in the fall, they're pretty sanguine. They said, look, I can see how this all plays out. And then it got a lot of it got put back on the table. And so I think what you see in the small medium sized businesses, there's a lot of uncorked potential there.

[00:05:35]They can borrow on lines of credit. They're borrowing a little bit more.

[00:05:38]But loan growth solid solid there amid double digits and things like that which is good loan growth. But they have so much capacity if they just had a little more certainty. And that's why they really want the war to end. So their input prices will not it will come back down because we see the gas pump.

[00:05:53]What really happens longer term is the products made with petroleum products come through the gates ready to go once they're ready to go in.

[00:06:00]And they just want certainty. Because if you're a big couple of cars with 200,000 people, you have lots of people.

[00:06:05]Pay attention all this and tell you what's going on.

[00:06:06]A research team, the best in the world. If you're if you're you and I owned a business and we were doing something, you have to do all that work yourself in it. Easier to do that work the more time you can spend on creating the revenue. So there's I think there's a little bit of a pop left out there beyond the eye, which is an unbelievable amount of spending and etc. there's another pop when general business gets more confident about the future path.

[00:06:27]I'd love to talk about your business a little bit as it relates to.

[00:06:29]I think there was a lot of excitement that you came out with this announcement that your intern and your college hiring class look incredibly robust.

[00:06:37]At the same time, I know you're speaking at Bernstein, saying something like 14,000 employees internally would also be basically reorganized.

[00:06:44]Re looked at thanks to eye not let go. Well, what what are the mechanics of that? What does it look like to sort of remake, not let folks go but remake a firm that's equipped with.

[00:06:55]So if you think this has been going on for years.

[00:06:57]So when you think about your employee base, you have a group of employees.

[00:07:00]They you have the attrition that goes on because people take jobs, they retire, etc.. So you have that.

[00:07:05]That's in our firms about 80%. So if you think about that, flip, that 8% times a 200,000 people means we have to hire more than 1000 people every month to stay, even in headcount. So that gives you a choice.

[00:07:15]Am I going to hire replacements or not? The second thing you have done is the 14,000 people in 25. We took from one job in a company and put another job through skills training. That's our own internal skills training.

[00:07:26]You hear about that in the public side, but we actually do it inside the company and even in the technology we have, people did product X Encoding System X, they have now moved to Code System Y and using these new techniques.

[00:07:37]So that all was about repositioning people.

[00:07:40]And so in the end of the day, we are moving massive amounts of people around.

[00:07:43]And the key was we need young people. So we just we had 2000 smart, brilliant kids coming in to be summer in terms next week.

[00:07:51]And then four weeks later we have 2000 permanent hires around numbers coming in to be permanent hires. We've agreed to hire 8000 kids from a community college. Uh, in addition, over the next five years, we agreed to hire, uh, 10,000 veterans in the next five years.

[00:08:04]So we're always hiring people in this company, uh, trying to create opportunity for people from a community college, come to our company, finished a degree, and have a better. If I can, I can I just ask very quickly because because I'm about out of time. This stuff is also really expensive.

[00:08:18]Yeah. Have you started to think about just the, like, inference cost of all this eye stuff?

[00:08:22]Are you asking people to pull back and keep track of it?

[00:08:24]We're not at that stage yet because frankly, at our scale, the numbers are not that big. We have $70 billion expenses.

[00:08:31]I can see where people run into this, but we have all 200,000 people have it to use. We want them to learn from it.

[00:08:36]There's that's just general usage, but to very specific applications like, uh, in the coding area and stuff. Yeah, that's costly, but it's paying for itself and we're pretty confident the business tree, we wouldn't do it unless we saw the business outcome we want, i.e. that the revenue or growth will exceed the cost we put in.

[00:08:52]And so but that will be a gating factor to people can really, really identify that. You have to say, wait, if I get all these costs, that doesn't come true. What happens?

[00:08:59]So we're we're putting in 100 projects. We got another thousand.

[00:09:03]We're looking at all this stuff, but we're always getting those are they can produce the revenue or are they the cost savings that we're supposed to have.

[00:09:09]And thank you so much for joining. And by the way, I'm also looking forward to more World Cup announcements. I know you're giving away some tickets to veterans. Yes.

[00:09:16]Uh, we just announced today we gave $2 million to buy $2 million for tickets to get a thing called vet tix for veterans and first responders, and that will.

[00:09:24]But I'm sure everybody's looking for that comes live fairly soon.

[00:09:27]Vet tix is a group that does other kinds of tickets that is owned by veterans, so it's very exciting. Ryan, thank you again.

[00:09:34]Really appreciate your time. That of course.

[00:09:36]Brian Moynihan the CEO of Bank of America.