美银CEO：罚款已入账，净息差增速上调至8%以上

[music] Bloomberg Audio Studios, podcasts, radio, news. Turmoil at BFA, pushing shares to their worst earnings day in more than a decade. You heard Charlie uh with the market roundup, piling on the pain for a bank that's already been the worst performer among the six biggest US banks in the past 5 years. It's also a major black eye for CEO Brian Moyahan, the lawyer turned executive who has led the bank Tim for nearly two decades.

Shares of Bank America trading lower after its earnings update showed stock and fixed income traders missed estimates. The bank's results also hurt by a charge tied to regulatory penalties over money laundering and sanctions violations.

Well, right now we head to Charlotte, North Carolina, the home of Bank of America, and that's where CEO Brian Moyahan is sitting down with Bloomberg's John Pharaoh. John,

we'll start here in New York. Carol, thank you very much and thank you very much to Tim as well. I'm pleased to say that the Bank of America chairman and CEO Brian Moan joins us now for more. Brian, welcome to the program. It's good to see you as always. There's a couple of different stories in the mix today. We've got to start with that chunky fine from Treasury. A big regulatory fine that we can address with you straight away this afternoon.

The language [snorts] from Treasury is quite damning, Brian. What's your interpretation of what went wrong here?

Look, at the end of the day, we had an examination a few years ago. Um we we got a cease and desist order. We have to do that work. Um this fine relates to that effort. They want us there was a debate a bit about what exactly we had to do. That's resolved. It's behind us. The billion two is going through. We've been expending uh the money to in the run rate already to do the remediation uh because you know we a few months ago we started picking up the cost structure and putting it in.

So we we'll get it done. We take it seriously and I think as time goes by is this will uh people understand it better.

I imagine you want to draw a line under the whole issue but just to extend the conversation on this particular topic just a little bit further. Brian, I imagine you also don't want to be drawn into how much of this has already been completed, what is left to really fix here. But I think for this afternoon, given where the stock is, there needs to be some confidence for investors that the costs associated with remedying this are in the baseline and there won't be any more surprises in the future.

How confident can investors be that that's the case? for the operational cost to do the work. We've uh added a lot of expense and it's in our baseline and we're continuing to operate that. Um and again, it's you a few hundred million dollars in the in a quarter here and it it and so it's not of additional expense that we've been running through. So we we got an understanding clear path forward. We've been completing a lot of tasks frankly over the last several months.

Um and we'll continue to finish it up. It came a lot about how how the thresholds are set and things like that. There's a lot of technical discussion about it, but at the end of the day, we understand what we need to do. We're doing it and we'll deliver it.

Brian, could you take us inside the bank and just discuss accountability? Just accountability just a little bit. What are discussions like with the board around accountability? And would you be open to aligning remuneration with resolution of some of these difficulties?

We we we have accountability for everything we do in a company, including a fine. U we got a you know gone through it before. in 2004 there was accountability for the examination the order already taken and so we'll the board will decide that when we get to the end of the year Brian of course this is overshadowing what was otherwise a mixed quarter for the bank trading capital markets investment banking that's one side of the business I actually wanted to start with the main street side of the business which seems to be performing quite well and I think otherwise we'd be talking about the fact that net interest income the path for net interest income looks pretty good from here can we just sit on that for a moment moment.

Brian, do you see the path to that improving from here even more as durable?

Yeah. So, we we basically were up $400 million in II second quarter, third quarter. Uh the markets contribution which other people uh you know have to it was basically flat. And so as you look forward, what's happening is the core loan book is growing. The core deposit book's growing. Our total cost of deposits 149 basis points. that grew uh 2% year-over-year and the non-interest bearing grew 5% the loans grew six or seven percent and the core businesses grew commercial business grew 8% that's great activity also bodess well for the US economy because the cu companies are borrowing but if you look at that ni what we said back last fall was this year 26 would be 5 to 7% increase over 25 we now have said we've raised that and now said we confirm 8% for the year and then at that same time we sort of said 5 to for 27 and we just raised that to 8% plus and that is just the stairst step climbing those stair steps of more loans uh more deposits and then the repricing of the balance sheet and and that just walking up.

We're up 15 basis points and net interest yield while others in the industry are falling and that's just the efficiency of the balance sheet coming through and so that has returns. You know we we made $8 billion absent the charge. We made almost $7 billion with the charge would be the second highest earnings of the group. And and so there's a lot of momentum. Our consumer bank made $3.5 billion. Our commercial bank made $2 billion.

Our wealth management company made a billion and a half and group faster than the peers. And so there's a lot of good things around the main street side. And frankly, even on the market side, you know, we had $5 billion trading revenue quarter against our peers. it didn't uh didn't hold up as well, but due to the fixed income mix, but the reality is it was one of the stronger third quarters we had in trading and investment banking.

We told people three or four weeks ago to be 1.6 to 1.8 and came out as 1.8. So, and again, that's a representative quarter. So, we feel good about the franchise. The pipelines are full, etc. But it's that good core engine of NI that's growing at 8% when when others are not coming close to that that's driving our our earnings forward. As you know, this is against the backdrop of much higher interest rates, a real repricing in the bond market as well.

There was some discussion in the last month and into to some extent it was hitting bank stocks across the board. Brian, to what extent would these higher rates eventually eat into net interest margins? How do you see the path of sequencing of things from here? So if you have two billion of deposits which you pay 159 basis points for or 149 basis points for and rates go up and you go up a lot less because a substantial part of those deposits are not interest bearing.

Uh higher rates are beneficial except if higher rates are because something really is bad in the economy and that has other issues. But if as as the rates grind up we will make more money. That's the nature of having a zero interest thing. When rates came down that's what crunches you because we have the zero interest and you don't go below zero. So simply put, our exposure to higher rates is always positive. It's less than it is because we try to manage both the down and up.

But the reality is that we just told people what we thought was 5 to7 with a rate environment, you know, 12 months ago that was sort of flattish into 27. We now are saying because the rate increases because we're seeing good core loan growth, good core deposit growth and having$2 trillion dollars of deposits that are very advantaged. We