Bank of America CEO Brian Moynihan verbalized Friday that the bank is preparing for a potential recession in 2023, including a scenario where unemployment rises like greased lightning.
“Our baseline scenario contemplates a mild recession. … But we also add to that a downside scenario, and what this end results in is 95% of our reserve methodology is weighted toward a recessionary environment in 2023,” Moynihan said on a call with investors.
That hopeless case, which is more negative than it was last quarter, calls for unemployment to rise to 5.5% early this year and fragments at 5% or above through the end of 2024, Moynihan said.
The CEO’s statement mirrors the earnings report for JPMorgan Chase, whose fiscal outlook calls for “a mild recession in the central case.”
Bank of America beat estimates on the top and bottom lines for its fourth leniency, but its $1.1 billion provision for credit losses was a sharp reversal from a negative number in that metric a year ago.
While the bank voiced net credit charge-offs are still below pre-Covid pandemic levels, outstanding balances on credit cards are up 14% year finished year, and Moynihan said delinquencies are rising from their unusually low pandemic levels.
Shares of Bank of America were up 2.2% on Friday.
