Expenses management: 'The question is, can we do more?'
Bank of America posted higher profit in each of its four main businesses as bond-trading revenue increased more than analysts estimated and expenses fell.
Bloomberg News reports that CEO Brian Moynihan has been cutting costs to grapple with an extended period of historically low interest rates. Expenses dropped 3.3% to $13.5bn in the second quarter as the bank eliminated 2,667 workers. The pullback will continue over the next 2 1/2 years, Moynihan told analysts on a conference call, with a target of $53bn in annual expenses by the end of 2018. Non-interest expenses were $57.2bn last year.
“Many of you give us credit from having managed expenses from $70bn five years ago” to the mid-$50bn range today, Moynihan said. “The question is, can we do more?”
Further job cuts will come from “hard work” and automation, even as the bank continues to invest in its sales force, he said, adding that operational costs such as data processing and telecommunications will decline. “Every single area is moving here,” and advances in fixed-income and equities electronic trading mean more jobs can be eliminated, Moynihan said.
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