Bank of America executives are under pressure to improve returns as they address investors this Wednesday. CEO Brian Moynihan, who has led BofA since 2010, will meet investors in Boston to outline the second-largest U.S. lender’s growth plans, its first such gathering since 2011. Investors are keen to understand how the bank will close performance gaps with competitors like JPMorgan Chase and Goldman Sachs. Bank of America declined to comment on the meeting. Bank of America is a global financial institution, providing a range of banking, investment, asset management and other financial and risk management products and services to individuals, small- and middle-market businesses and large corporations. JPMorgan Chase is a financial services firm engaging in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management.
Analysts point out Bank of America’s underperformance in loan growth over the past 15 years, as well as its relative lag in wealth management, investment banking, and credit cards. Moynihan took charge after the 2008 financial crisis, integrating Merrill Lynch, repaying a government bailout, and cutting jobs. While he engineered a significant turnaround driven by ‘responsible growth’, investors now want to see greater profitability from the bank’s investments.
In the third quarter, BofA generated a 15.4% return on tangible equity (ROTCE), while JPMorgan achieved 20%. Analysts suggest BofA should target returns between 16% and 18%. Shareholders are interested in BofA’s plans to take advantage of its consumer network and corporate bank to expand wealth management faster. BofA manages $4.6 trillion in client assets within its core wealth business, whereas JPMorgan manages $6.8 trillion, and Morgan Stanley manages $7 trillion.
Moynihan’s succession plans are also under scrutiny. After recently turning 66, he announced plans to stay on through the decade, naming Dean Athanasia and Jim DeMare as co-presidents, and Alastair Borthwick as executive vice president. Investors aim to get to know the leadership team better, setting the bar at the standard established by JPMorgan. Bank of America’s shares have increased by nearly 21% this year, compared to 29% at JPMorgan.
