Bank of America Corp., the second- biggest U.S. lender, can improve results by about $4 billion per quarter as expenses subside and trading rebounds, said Thomas Brown, chief executive officer of Second Curve Capital LLC.
Brown said today that he met CEO Brian T. Moynihan yesterday and asked how the Charlotte, North Carolina-based firm would improve revenue before taxes and loan-loss provisions, which plunged to $4 billion a quarter from about $10 billion.
“What he said is, in the near term, we’ve got a billion dollar per quarter improvement we can do in the capital markets that was unusually weak in the fourth quarter,” Brown said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. Moynihan said the firm can reduce $2 billion per quarter in costs through his efficiency plan and mortgage expenses will come down by another $1 billion, Brown said.
Bank of America has surged 46 percent in New York trading this year after concern over mortgage expenses and stagnant revenue drove a 58 percent drop in 2011. Brown, a Bloomberg contributing editor, previously had been critical of Moynihan, saying last year that he’d “better do better” than peers after losses. Brown said he took a stake after the stock’s decline made the valuation attractive.
“We still think he got off to a slow start,” Brown said. “Remember, he’s 26 months into being CEO of Bank of America. We would’ve liked to see him attack the management issues faster, attack their expense structure sooner.”
Moynihan also told Brown that unprofitable assets and expensive debt would be replaced by better loans and low-cost retail deposits, improving results, according to the investor.
Bank of America rose 1.4 percent to $8.22 as of 9:53 a.m. in New York. Jerry Dubrowski, a spokesman for the company, confirmed that Brown met with Moynihan.
To contact the reporter on this story: Hugh Son in New York at email@example.com