Bank of America Corp. has more expenses to cut as it weathers another year of low interest rates, Chief Executive Officer Brian Moynihan told shareholders.
Profitability at the bank, which generates about half its revenue from interest income, has been weighed down as the Federal Reserve keeps benchmark interest rates at 0.5 percent. Rates have been below 1 percent for nearly a decade.
“What do you do? In that environment, you drive down expenses,” Moynihan, 56, said Wednesday at the bank’s annual meeting in Charlotte, North Carolina. “We should run better.”
Bank of America cut more than 10,000 jobs in 2015, and Moynihan has said he will eliminate more this year as the industry gets squeezed by sluggish trading and rising losses on loans to energy companies. The firm’s efficiency ratio, which measures how much costs consume revenue, was 75 percent in the quarter, worse than rivals including Wells Fargo & Co., which was 59 percent for the period.
“We are not waiting around for them to rise,” Chief Financial Officer Paul Donofrio said, referring to interest rates. “Instead, we are focused on the things we can control,” including expenses, taking in more customer deposits and increasing the number of loans, he said.
Bank of America’s annual meeting lacked the drama of last year’s gathering, when lead independent director Jack Bovender told shareholders that they should have been allowed to weigh in on a rule change that expanded Moynihan’s duties to also include chairman. Pension funds and proxy advisers argued that more independent oversight was needed for Moynihan. At a special meeting in September, shareholders ultimately approved a resolution letting Moynihan keep both CEO and chairman titles.
Bovender this year defended the efficiency targets bank managers must meet to receive their full compensation awards. While continuing efforts to expand, Bank of America will seek avoid the type of risk-taking that led to the financial crisis, he said.
Shareholders this year went along with management’s three ballot proposals — including the company’s executive compensation plan — with at least 93 percent of ballots cast in favor, according to a preliminary tally. Investors rejected a shareholder provision that would have amended the bank’s clawback policy, preventing executives from receiving deferred compensation if the lender had to pay penalties for violating laws within at least 10 years of the award.
Bank of America climbed 0.4 percent to $15.14 at 1:59 p.m. in New York, paring this year’s decline to 10 percent.