Bank of America can double its consumer market share despite growing fears about the power of the country’s largest institutions, according to Brian Moynihan, chief executive.
“Our market share in consumer is probably 12, 13, 14 per cent, depending on who counts . . . The reality is, you could double that,” Mr Moynihan said in an interview with the Financial Times.
“Other companies that you think might have big consumer markets share — the auto companies, the soft drink companies, the beer companies — they have massively more consumer share [than BofA],” he said.
In beer, AB InBev controlled 41 per cent of the US market in 2018, according to the National Beer Wholesalers Association.
With thousands of banks, the US is far less concentrated than many European countries but the largest lenders have accumulated more power since the 2008 financial crisis, aggravating longstanding fears about their dominance.
When regulators approved a merger between BB&T and SunTrust last year, the biggest industry deal since the crisis, Democratic senator Sherrod Brown complained that deregulation had “amplified the potential for the biggest banks to threaten our financial system. Further consolidation by large banks would make matters even worse.”
BofA is already the largest US consumer bank, with $730bn of retail deposits. It is by far BofA’s most profitable unit, with $13bn of net income last year and a return on capital of 35 per cent.
BofA cannot grow its deposit base by buying other banks: a federal law forbids any bank to use acquisitions to attain more than 10 per cent of deposits nationwide. BofA has already passed that threshold: its $1.4tn of total deposits equate to 10.7 per cent of the total, according to data from the Federal Deposit Insurance Corporation, ahead of JPMorgan Chase on 10.2 per cent, which is also increasing its market share.
Mr Moynihan said a doubling of the retail business could be achieved without a commensurate increase in its branch network, noting that the number of branches has fallen over the past decade, from 6,100 to 4,300, while consumer deposits have almost doubled.
Asked whether greater concentration in banking was good for customers or might alarm regulators, Mr Moynihan said: “If we do a good job for the customers and clients and we’re fair in our pricing, I think that’s good because . . . the scale that we have enables us to do more for the customers.”
Mr Moynihan said the pieces were in place for BofA to continue taking market share, with deposits growing above the industry rate, a low risk loan portfolio and a strong balance sheet with billions in excess liquidity.
Mr Moynihan said he would not look overseas for retail growth. It would take years to grow to a market share that would give them material deposits or revenue, he said. BofA’s US interest-bearing deposits grew by almost $50bn over the past year, and to accomplish similar levels of growth “in a smaller environment would assume [a level of] success that is hard to assume, and why bother?”
He noted that the bank’s wealth management division had exited international markets for lack of profitability.
Nor are the diversification benefits of foreign exposure attractive. “There isn’t going to be enough to offset a US recession in what we could do outside the United States because . . . [the] US is so big,” he said.
