Bank of America Corp. (NYSE:BAC) is starting to see consumer spending edge higher after diving on the start of the coronavirus lockdown.
The beginning increase follows a 30% fall. Now it is showing up as consumers buy more groceries, restaurant meals, clothing and gasoline, Chief Executive Officer Brian Moynihan said in a TV interview Friday.
US aggregate spending averaged about $50-B over the past 4 wks, comparable to levels in the Fall of Y 2017, he said.
“It’s starting to grow a little bit,” he said. “You’re seeing the start of a little bit more spending in some areas, in some of the states that have opened up a little bit. So we will see where that leads us, because it’s still pretty early on.”
CEO Moynihan gave an update on the bank’s participation in the government’s Paycheck Protection Program (PPP) run by the Small Business Administration (SBA).
“This has been a heck of a week in the history of the PPP,” he said. “The SBA’s working posture this week started off a little tough, but has improved dramatically.”
Bank of America now has more than 231-K loan numbers from the SBA, a requirement before the loans can be funded. Over the next 48 hrs, it expects to send out 180-K promissory notes to businesses for a total of as much as $20-B.
Borrowers must execute the documents, send them back to the bank, “and the money goes into their account relatively quickly,” he said. The Charlotte, NC based lender has about 10,000 people working around the clock on the small-business relief program.
Other takeaways from the interview:
- “We will continue to buy our stock back, because at the end of the day, that is capital that we are generating that we do not need to support the business,” CEO Moynihan said. The nation’s 8th biggest banks temporarily suspended share buybacks for the first and second quarters. “We have all the capital we need to serve the customers.”
- The lender is committed to paying dividends, he said.
- The trend toward digital and remote work, which started before the pandemic, will reduce the need for physical space, he said. “We will have less real estate demand.”
Have a healthy weekend, Keep the Faith!