Bank of America’s prudence is at odds with times

Brian Moynihan, chairman and chief executive officer of Bank of America, speaks during the Bloomberg Global Business Forum in New York City, September 25, 2019. REUTERS/Shannon Stapleton/File Photo

and consequently extracts less profit for shareholders. Take credit cards, a particularly lucrative type of lending: Bank of America’s $76 billion of average balances at the end of September was roughly half JPMorgan’s. That’s one reason Moynihan’s bank gets 3.3% interest yield on loans, while Jamie Dimon’s gets 4%. It’s sizeable when spread across a $1 trillion loan book.

. That’s likely to be one reason Bank of America trades at 14 times expected earnings for the year ahead, a premium to its rivals, according to Refinitiv. Moynihan’s intention to stay on until 2030 suggests he thinks the characteristics that make a good boss now will still be in fashion then, despite the dramatic shift towards technology-based banking. Meanwhile, his relative caution points to a belief that the next crisis might reward caution more than the last one did. Right now, these seem contrarian bets.- Bank of America on Oct. 14 reported $22.8 billion of revenue for the third quarter, up 12% from the same period a year earlier.

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