Images: Bank of America CEO Brian Moynihan, screenshot from https://www.cnbc.com/2022/10/17/bank-of-america-ceo-brian-moynihan-says-the-us-consumer-is-healthy.html) / Credit: Nastco, https://www.istockphoto.com/portfolio/Nastco?mediatype=photography
Despite the talk of inflation, recession, and other fears that could slow down spending, customers at Bank of America helped push transaction volumes 10 percent higher in September and the first half of October than a year earlier, according to bank CEO Brian Moynihan.
And it’s not just BofA. U.S. banks seem to be having a Goldilocks moment with their credit card portfolios, Jennifer Surane wrote for Bloomberg, suggesting a scenario in which the economy is not too hot and not too cold, but just right.
“Analysts might wonder whether the talk of inflation, recession and other factors could [result] in a slower spending growth,” Moynihan said Monday during a conference call on third-quarter results that exceeded analyst expectations. “We just don’t see [that] here at Bank of America.”
BofA reported third-quarter earnings Monday, with credit card spending increasing 13 percent and 1.25 million new credit card accounts. The average FICO scores for the portfolio were 770.
Price inflation accounts for some of the higher bank customer transaction volumes, Moynihan said, but the number of transactions also rose 6 percent.
Consumer creditworthiness remains strong, according to a Bank of America chart, which shows the average FICO score on consumer credit cards for Q3 is 770; the average FICO score on auto loans is 789; the average FICO score on new mortgages is 768 and the average FICO score on home equity lines is 792.
Some Twitter users found BofA’s average customer FICO scores hard to believe.
“Wow numbers that if you buy them make the economy seem just fine before a holiday surge” @Ysrthgrathe42 wrote on Twitter.
Moynihan said customers’ account balances are higher than before the covid-19 pandemic — a sign that they can keep spending, CNBC reported. That is especially true for those who had the smallest balances, which were about five times higher than before the pandemic, according to a Bank of America chart.
Late payments are still below pre-2020 averages, Moynihan said, indicating that so far, customers weren’t having much trouble keeping up with their debt.
“Reminds me of The Big Short scene when they meet with the rating agency,” tweeted Winston Smith before 1984 @bonhol.
Investor Michael Burry, whose famous bet against the U.S. housing market in the 2008 financial crisis was portrayed in the 2015 film “The Big Short,” is one of several voices warning of potentially dangerous global economic conditions. Burry predicts that the current economic slide could be worse than the Great Recession.
“My recent CitiCard account showed my ‘FICO’ score at 876 last month. I didn’t even know that was possible” tweeted Country_Bumpkin @BumpkinNobody.
“Those are incredibly high FICOs given the macro environment. Reminds me of S&P ratings on mortgage bonds pre-Financial Crisis,” tweeted Dan Taylor @ProfAnalytics.
Images: Bank of America CEO Brian Moynihan, screenshot from https://www.cnbc.com/2022/10/17/bank-of-america-ceo-brian-moynihan-says-the-us-consumer-is-healthy.html) / Credit: Nastco, https://www.istockphoto.com/portfolio/Nastco?mediatype=photography
