The conversation at the World Economic Forum in Davos, Switzerland this year has centered around the potential for both global and domestic recession. Many Wall Street firms have been laying off thousands of employees, including Goldman Sachs and Morgan Stanley. However, Bank of America CEO Brian Moynihan sees things differently.
In an interview with Maria Bartiromo, Moynihan stated that Bank of America will be very careful when it comes to managing their headcount. He said that in the first quarter of last year, they had to hire 4,000 people to replace those who left, but the company’s headcount got too high. Now they are slowing down hiring and letting the headcount drift to where they want it to be. Moynihan also stated that they have a 10% turnover rate and with 215,000 employees, they have to hire 5,000 people to keep the headcount stable.
Loan Demand and Growth
When asked about loan demand and growth, Moynihan stated that the fourth quarter had moderate growth, partly due to the pandemic. They are looking for single digit growth in the future, as companies are becoming more cautious about their forward view. Credit usage has gone back down a little bit, but small business demand remains very strong. Consumer demand is okay, and mortgages are down due to changes in interest rates. On the corporate side, companies are being more careful and doing more planning to make sure they don’t miss their view of the economy.
Where is the Growth Coming From?
Moynihan stated that loan growth is coming from both mid-cap companies and consumers. Mid-cap companies are doing just-in-case spending due to supply chain issues, while consumers are using credit cards more in the fourth quarter. Corporate lending is solid, but activity is more consistent with a lower growth economy. He also mentioned that inflation is not over yet, but activity is starting to show that the Federal Reserve raised rates a lot to slow down the economy.
while many Wall Street firms are laying off employees, Bank of America is taking a different approach by managing their headcount carefully. They are also seeing moderate growth in loan demand, with small business and consumer demand remaining strong. Brian Moynihan is confident that capitalism will solve these problems.