Healthy Consumer Demand Driving Q2 Retail Outlook
Bank of America Corp projects an encouraging performance for its retail business during the second quarter of 2023, underpinned by robust consumer demand, stated a top official on Wednesday. During a Reuters Newsmaker event, Holly O'Neill, Bank of America's president of retail banking, remarked that consumers remain financially resilient. "Savings and account balances are still well above where they were pre-pandemic," she noted, indicating that consumers would weather a mild recession later this year, thanks to this cushion.
Increased Consumer Spending and Market Perception
April saw U.S. consumer spending rise beyond expectations, enhancing the economy's growth potential for the second quarter. As households plan to acquire more significant items, including motor vehicles, over the following six months, consumer confidence has unfortunately dipped to a six-month low. This drop in May reflects Americans' wavering evaluation of the labor market.
Bank of America's Strategic Focus and Competitive Landscape
Despite being the second-largest lender in the U.S., Bank of America is more interested in expanding its existing businesses and client relationships than in pursuing acquisitions. This strategy sets it apart from its competitor, JPMorgan Chase & Co, the nation's largest lender, which recently purchased First Republic Bank. O'Neill emphasized the bank's focus on organic growth, expressing no sense of undue competitive pressure.
Consumer Spending Patterns and Delinquencies
Bank of America's data demonstrated a 1.2 percent decrease in consumer spending on its cards in April year-on-year, marking the first decline since February 2021. Nonetheless, O'Neill assured that demand for credit cards, auto loans, and mortgages remains stable. She also noted that while delinquencies remain near-historic low levels, more customers are beginning to fall behind on payments — a trend she expects to continue.
Artificial Intelligence and Diversity in Leadership
In an expansive interview, O'Neill also addressed the bank's utilization of artificial intelligence. She detailed the various uses of their AI-powered virtual assistant, Erica, which helps bank employees look up information, policies, and procedures. As a veteran of 27 years in the company, O'Neill also underscored the importance of diversity in leadership. She shared her emphasis on fostering confidence and risk-taking, particularly among women. Her career leaped when she moved from being the COO of the private banking division to the head of the consumer bank, a transition she considers the most significant and rewarding risk she's taken.