Bank of America Shares Decline due to ‘Slowing Interest Rates’

Shares of the Bank of America went south last Tuesday, April 16, after CFO warns a decline in net interest brought by the slowing US economy.

Chief Financial Officer Paul Donofrio said in an article published by Reuters that people can expect a decline in the net interest even though he said in a press conference that the bank sees 3 percent growth in terms of consumer loans.

“Bank of America has demonstrated for years now that we can grow well in an economy that is just growing moderately. Ultimately, we expect NII for the full year of 2019 to be up roughly half the pace of 2018. This perspective assumes today’s forward curve and loan and deposit growth consistent with the current economy,” said Donofrio.

Banks’ core way to make money is through interest growth. If the growth is slow, investors will doubt if the bank is still worth to invest to or not.

With the recent announcement, it showed that investors are already testing the water whether or not to transfer investments to another bank.

Meanwhile, Bank of America is not the only one affected in the ‘slowing US economy’ because last week, Wells Fargo’s shares also declined by 2 percent to 5 percent.

According to some experts, economic growth and consumer activities are the biggest factors affecting the interest growth of banks. In the case of Bank of America, the former factor enabled the consumers to think twice before applying for credit cards, loans and mortgage.

Bank of America’s bounce back plan is to release a digital financial coach where 66 million customers can access. This program will help consumers get ready for buying a house, for education and even retirement. The program will be called ‘Life Plan’ and will be released this coming fall.