Bank of America Corp., the second-biggest U.S. lender, will steadily bring down expenses this year, said Chief Executive Officer Brian T. Moynihan.
“You’ll see it every quarter,” Moynihan, 52, said today at a conference in New York. “We can’t carry these costs in the revenue environment we’re in,” he told the audience of analysts and investors. “Even in an improved revenue environment, we’re still going to have to be hard on costs.”
Moynihan sold $33 billion in assets and announced 30,000 job cuts last year as part of a plan to build capital and reduce expenses. Revenue has been stagnant at the Charlotte, North Carolina-based bank, which has booked about $42 billion in costs tied to repurchases, litigation and writedowns from faulty mortgages and foreclosures since 2007. Moynihan said today the mortgage market is “healing.”
Bank of America rose 5 cents to $8.07 at 12:01 p.m. in New York. The company has surged 45 percent this year on signs that the U.S. economy is improving. Moynihan said last month that expenses tied to soured mortgages will subside by about $1 billion a quarter, which combined with other cost-cutting plans should help results rebound.
The CEO has spent the last two years cleaning up after his predecessor’s decision to acquire Countrywide Financial Corp., the biggest home lender during the U.S. housing bubble. Investors who buy loans are entitled to ask for refunds or compensation if they find missing or inaccurate data on home values or the borrower’s income, and Countrywide has been criticized by regulators for lax policies and sloppy procedures.
Bank of America agreed last month to contribute almost half of a $25 billion industry settlement ending probes into abusive foreclosure practices. The accord, which included 49 state attorneys general and the U.S. Justice Department, will include borrower assistance and payments to the government.
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