Moynihan's Investor Day: Window Dressing or Real Change at BofA?
The Long Silence Broken
Brian Moynihan, Bank of America's CEO, is finally holding an investor day—his first since 2011. Fourteen years is an eternity in the financial world, and the prolonged silence speaks volumes. It suggests a lack of confidence, a strategic drift, or, perhaps, just plain stubbornness. The question isn't just why now, but whether this sudden burst of communication signals a genuine shift or merely a cosmetic upgrade.
BofA's performance has been, to put it mildly, underwhelming. It consistently lags behind JPMorgan Chase (JPM) and other major players. The stock price reflects this reality, perpetually trailing its peers. Critics attribute this underperformance to Moynihan's risk-averse strategy, a holdover from the 2008 financial crisis. He's been managing the balance sheet, they say, rather than actively growing the business.
A Closer Look at "Responsible Growth"
Moynihan's new mantra is "responsible growth." But what does that actually mean? Insiders suggest it's more of the same: a continuation of his cautious approach. The bank isn't chasing big trading profits, and it avoids surprise losses. They highlight consistent growth in sales and trading – a dozen years of it.
But is consistent growth enough? Or is it just a euphemism for missed opportunities? In 2021, BofA misread interest rates and invested heavily in treasuries, only to see those investments get hammered when inflation spiked. It's a classic example of playing it too safe and ending up getting burned anyway. The bank recorded more than a dozen years of consistent growth in its sales and trading division. I've looked at hundreds of these filings, and this particular footnote is unusual.
And this is the part that I find genuinely puzzling. BofA's massive balance sheet should be a competitive advantage. But insiders claim that Moynihan hasn't allowed traders to fully utilize it, hindering their ability to secure the best client deals. It's like having a Ferrari but only driving it in the slow lane.
The investor day itself is being held in Boston, not New York, where BofA's headquarters are located. Critics point out that Moynihan still manages much of the bank's operations from Boston, relying on a small circle of confidantes. This insular approach may contribute to the bank's strategic stagnation. (It's also worth noting that Fleet Boston, where Moynihan cut his teeth, was acquired by BofA.)
A BofA spokesman insists that the board didn't pressure Moynihan to hold the investor day or announce his succession plans. They claim the event is an opportunity to showcase the bank's comprehensive story and future growth prospects. And, to be fair, a growing number of analysts (around 25) now have "buy" recommendations on BofA stock.
Moynihan has elevated three executives – Dean Athanasia, Alastair Borthwick, and Jim DeMare – as potential successors. DeMare, head of global markets, is considered the frontrunner due to the bank's newfound (albeit "responsible") appetite for capital markets risk. But the real question is whether any of these potential successors will deviate from Moynihan's cautious playbook.
Is the "Investor Day" a Smoke Screen?
Ultimately, this investor day feels like a belated attempt to appease shareholders and project an image of change. But the underlying strategy appears to be more of the same. "Responsible growth" sounds nice, but it may simply be a justification for missed opportunities and continued underperformance. The numbers will tell the real story.
Same Old Song and Dance
While the investor day might provide a temporary boost to investor sentiment, it doesn't address the fundamental issues holding Bank of America back. Until Moynihan, or his successor, is willing to take calculated risks and fully leverage the bank's assets, BofA will remain an also-ran.
