Despite slow economic growth and flat revenue, Bank of America grew earnings 16% last year and plans further expansions, says chairman and CEO Brian Moynihan.

Author: Gordon Platt

Global Finance: What do you think makes Bank of America the best bank in North America?

Brian Moynihan: We’re delivering solid results for our customers, clients, shareholders and employees. In 2016, we produced earnings of $17.9 billion, a 13% increase over 2015. It was the second-most profitable year in our company’s history. In a year in which we had a series of unexpected events around the world, we were able to achieve 1% growth in revenue against the backdrop of a slow-growth US economy. We also returned more capital to shareholders through higher dividends and more common stock repurchases. Each of our business segments played a role in driving our earnings growth. We call our approach “responsible growth.” In addition to focusing on customers and clients, responsible growth includes growing within a clear risk framework so that we can maintain our balanced, stable and financially strong platform. This means understanding the risk and reward in everything we do and empowering our teammates to share their opinions and ideas so we make better decisions. Also central to responsible growth is that it be sustainable. That includes rigorous standards of corporate governance, investing in our communities, and striving to be the best place to work by helping our 200,000 teammates achieve their goals. One example: As of early 2017, we’ve increased our minimum wage to $15 an hour. We will continue to adjust that, as we have regularly for several years now. In 2016, we also increased our fully paid parental leave from 12 to 16 weeks for all new parents. We create sustainable results through our Simplify and Improve (SIM) program as well. Driven by thousands of ideas generated by our own teammates, SIM is our ongoing process of simplifying our company, eliminating or streamlining our internal and external processes, and reducing costs so we can reinvest in future growth.

GF: What is your strategy for growth?

Moynihan: We will remain on the path that led us to near-record earnings in 2016 by pursuing responsible growth. This strategy has four tenets: grow and win in the market; no excuses; grow with our customer-focused strategy; grow within our risk framework; and grow in a sustainable manner. To put it more simply: Not every dollar is a good dollar, [it has to] come from activities that satisfy a customer need and fit our risk parameters. In both the near term and for the long term, given the current regulatory environment and because of the way we rebuilt our balance sheet and how we operate the company, we will have excess capital to put to work driving the economy. We are lending, and we will continue returning capital to shareholders through dividends and stock repurchases.

GF: How do you plan to stay on top with large US corporates?

Moynihan: Our global banking business works with virtually every one of the S&P 500 firms. In addition to a range of lending and other solutions, we have one of the world’s top-tier investment banks, ranked number three globally in investment banking fees last year. We also are one of the largest lenders to midsize companies and to small businesses. We bring the broadest array of capabilities to our clients—cash management, trade financing, lending in local currencies, and more—to support businesses that are driving the real economy here in the US and around the world.

 

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