SKN | Moynihan Signals Stronger U.S. Growth as Bank of America Targets Higher Returns

Key Takeaways

• Bank of America now sees 2026 U.S. GDP near 2.8%, with internal data showing consumer spending up roughly 5% year over year. 
• Management reiterated a 16%–18% ROTCE target, 5%–7% NII growth, and 200–300 bps operating leverage over the next 8–12 quarters. 
• Regulatory “normalization” and capital clarity could influence shareholder returns and valuation trajectory.

Speaking at the bank’s 34th Annual Financial Services Conference, CEO Brian Moynihan outlined a constructive macro outlook, pointing to upward revisions in GDP expectations and resilient consumer activity across income brackets. The message was clear: fundamentals remain intact, and management sees a pathway to higher returns.

Macro Backdrop: Spending Resilience and Stable Labor

Bank of America’s internal transaction data showed January consumer spending rising approximately 5% year over year across low-, middle-, and high-income cohorts. Moynihan acknowledged affordability pressures but emphasized that aggregate spending continues to expand.

The labor market remains supportive, with forecasts suggesting unemployment could hold in the mid-4% range into 2026. A stable employment base, combined with gradual rate cuts, could sustain loan growth and deposit stability.

The bank’s research team now forecasts 2026 GDP growth near 2.8%, reflecting improving business confidence as trade and policy uncertainties moderate.

Strategic Targets: ROTCE and Operating Leverage

Moynihan reiterated Bank of America’s medium-term goal of achieving a 16%–18% return on tangible common equity. The bank delivered just above 14% in the most recent year and expects to close the gap within 8 to 12 quarters, assuming steady economic growth.

Management projects 5%–7% growth in net interest income alongside 200–300 basis points of operating leverage. Loan growth in the mid-single-digit range and deposit expansion of roughly 2%–3% are embedded in those assumptions.

Expense discipline remains central. Headcount has remained broadly stable over a decade despite business growth, while technology investment has increased meaningfully.

Regulation and Capital Deployment

Moynihan described the regulatory environment as moving toward “normalization,” with forthcoming capital proposals expected to be constructive. He noted that capital requirements have increased materially in recent years without commensurate increases in industry risk, suggesting potential recalibration.

Clarity around Basel adjustments and G-SIB recalculations could influence capital flexibility. The bank continues to prioritize dividend payments and share repurchases with excess capital, while maintaining ratios near target levels.

Regulatory math, rather than macro uncertainty, may prove the decisive variable for shareholder returns.

Consumer Affordability and Product Strategy

On affordability, Moynihan addressed potential interest-rate caps on credit cards, cautioning that artificial limits could reduce credit availability. He highlighted existing measures such as lower overdraft thresholds, a short-term $500 loan product for a $5 fee, and a no-frills, lower-rate credit card. The strategy blends social positioning with risk-adjusted economics, aiming to preserve customer access while maintaining profitability discipline.

Business Momentum Across Segments

Consumer banking continues to emphasize primary checking growth and digital efficiency. Wealth management is targeting net new asset growth above 4%, supported by platform connectivity and expansion initiatives.

Payments operations have delivered consistent year-over-year growth, and markets activity remains aligned with expectations. International operations account for roughly one-fifth of the business, with continued opportunities in Europe and Asia. Diversification remains a structural strength.

Strategic Interpretation

Bank of America’s narrative rests on three pillars: resilient consumer activity, disciplined expense management, and improving regulatory clarity.

If GDP growth approaches projected levels and credit quality remains stable, the pathway to 16%–18% ROTCE appears achievable. However, margin dynamics, deposit competition, and capital rule adjustments will determine whether optimism translates into sustained valuation support. Momentum in fundamentals must now justify momentum in targets.

For confidential discussions regarding U.S. banking cycle positioning, capital rule recalibration scenarios, and portfolio strategy within diversified financial institutions, our senior advisory team is available for discreet consultation tailored to institutional and cross-border investment mandates.