Among the first speakers at Bernstein's Annual Strategic Decisions Conference, Moynihan focused heavily on the changing interest-rate environment, operating in an era of increased regulation, and what's next for the bank. The 31-year-old conference, held at New York's Waldorf Astoria, offers investors and analysts a chance to hear from an array of Fortune 500 companies, from Bank of America to Yum Brands (YUM), McDonald's (MD) and JPMorgan Chase (JPM)
While Moynihan focused on the future, his remarks made clear that the 2008 crisis continues to weigh on the Charlotte, N.C.-based banking giant.
Like its rivals, Bank of America is anxious for the Federal Reserve to begin raising interest rates, which were slashed to around zero during the crisis. While anyone with a savings account knows the pain of near-bottom deposit rates, as Moynihan pointed out, the interest banks can charge on loans is also suppressed.
Widening the spread between interest charged on loans and interest paid on deposits -- also known as net interest margin -- would benefit the bank immensely. The figure is an industry benchmark for the profitability of a bank's lending operations. As of the end of 2014, Bank of America's net interest margin was 2.1%.
Compounding the issue of narrowing interest-margin spreads is that the banks have had to adhere to tighter lending standards and capital requirements following the crisis, which necessitated government bailouts and wiped out trillions of dollars in market value. |