Bank of America executives said Tuesday they remain focused on shedding costs to meet expense targets outlined a year ago, as the Charlotte-based bank reported its best earnings in six years.
The bank disclosed plans last July to reduce annual noninterest expenses to $53 billion by the end of 2018, through automation, reducing personnel and other efforts. On Tuesday, in discussing the bank’s second-quarter financial results with analysts, CEO Brian Moynihan did not rule out exceeding that cost target once it’s reached.
Plans are to hit the $53 billion mark, “and then we’ll move from there,” Moynihan said. “We haven’t made projections past the $53 (billion) ... just because we’ve got a lot of initiatives coming in,” he added.
Moynihan’s comments Tuesday came as the No. 2 U.S. bank by assets reported $5.3 billion in profit, the highest of any quarter since $6.2 billion in the third quarter of 2011, boosted partly by a rise in income from lending.
Bank of America also said the recent quarter set records in some of its business, such as the global wealth and investment management segment, which posted its highest quarterly profit ever.
Companywide, quarterly profit was 46 cents a share, up from 41 cents a year earlier, and exceeded the 43-cent average estimate of 24 analysts surveyed by Bloomberg.
Since taking the helm in 2010, Moynihan has chopped away at expenses at a company that grew unwieldy after decades of acquisitions. During his tenure, the bank has slashed costs through shedding jobs, branches and non-core operations. Just last month, the bank announced layoffs that affected an undisclosed number of technology workers in Charlotte.
Bank of America announced the $53 billion target after reporting second-quarter 2016 profit plummeted 18 percent from a year earlier, as low interest rates ate into its earnings. Executives noted at the time that costs are within their control even if interest rates are not. Last month, Chief Operating Officer Tom Montag said the bank will continue cutting costs after achieving the $53 billion goal by finding additional ways technology can replace people.
Employment rose by 371 people in the recent quarter from the first quarter but fell by more than 4,000 from a year earlier. Employment at the end of the second quarter stood at 210,904.
Chief Financial Officer Paul Donofrio said half of the year-over-year decline stemmed from the June 1 sale of the bank’s U.K. consumer credit card business, while the other half affected the consumer banking segment. Executives noted the bank continues to hire, including for sales positions.
On Tuesday, executives touted reaching a target for a measure closely tracked by investors that shows how much it costs the bank to generate $1 of revenue. But in another key area, Bank of America saw weaker results in the quarter.
While the bank’s net interest income rose by $868 million from a year earlier, it fell by $72 million compared with the first quarter of this year.
Investors have been looking for Bank of America to benefit from rising interest rates, because the company is seen as the most sensitive to higher rates among the largest U.S. banks. Last month marked the fourth time the Federal Reserve has raised interest rates since the financial crisis.
The bank noted Tuesday its results in the recent quarter were helped by higher rates but that other factors had an offsetting effect, such as the U.K. business sale.
Bank of America became the latest large U.S. bank to report second-quarter financial results.
Last week, Wells Fargo disclosed a 4.5 percent increase in profit, while JPMorgan Chase announced a 13 percent rise in profit and Citigroup reported a 3 percent decline.