Episode summary
Bank of America's Investor Day, McDonald's Earnings Report, ISM Services Data | Bloomberg...
Bloomberg Intelligence
· · 13 min · Hosts: Paul Sweeney, Scarlet Fu · Guests: Katherine Doherty, Redd Brown, Steve Miller
Summary
Bank of America used its first investor day in about 15 years to pitch a fresh growth story after lagging big-bank peers. The guest said management is targeting at least 12% annual EPS growth over the next several years and replacing the old “responsible growth” frame with a newer promise of growth that “sticks to the ribs.” The bank emphasized existing businesses, deposit growth, infrastructure and technology rather than acquisitions, while pointing to a long track record of expansion since 2019 and even earlier.
The guest said consumer banking and wealth management are key pillars of that plan. In consumer, Bank of America highlighted that more than 90% of customers already have a core checking or savings account, which executives view as a base for cross-selling. In wealth, the bank leaned on brand recognition and scale as advantages in bringing in new advisers and assets.
McDonald’s earnings added another read on the consumer. The guest said the chain is seeing higher-income diners trade down for value while lower-income diners remain under pressure, a pattern also visible at Yum and Burger King. McDonald’s is spending more on marketing and digital promotions to rebuild its value reputation, accepting some short-term margin pressure. Separately, the ISM services data showed stronger new orders and business activity, but prices paid rose to 70, suggesting inflationary pressure is still present even as employment stays soft.
Key takeaways
- The guest said Bank of America is targeting at least 12% annual EPS growth and is framing the message around growth that “sticks to the ribs.”
- The guest said Bank of America is emphasizing deposits, technology and existing franchises over acquisitions or divestitures.
- The guest said more than 90% of Bank of America’s consumer customers already have a core checking or savings account, supporting cross-sell efforts.
- The guest said McDonald’s is seeing higher-income consumers trade down for value while lower-income customers remain pressured.
- The guest said McDonald’s is absorbing higher marketing expense and some franchise support to rebuild its value proposition.
- The guest said ISM services new orders improved and prices paid rose to 70, pointing to firm demand but persistent inflation pressure.
Notable quotes
“we have a new narrative today and it expands from the old narrative of responsible growth”
“they are seeing uh really 90% plus of their customers have a core checking or savings account”
“we saw new orders come back and we saw business activity increase”
How the episode opens
Bloomberg Audio Studios podcasts radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m.
Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. It is Bank of America's investor day and this is the first investor day the bank has held in about 15 years and it comes as um the stock of Bank of America has trailed its big bank peers not just this year but as Katherine Dhy of Bloomberg News points out last year and for the past 5 years as well.
Katherine joins us now from Boston right outside the Bank of America investors a taking place. Katherine, um, Bank of America has come out with some new targets that it's talking up, uh, talking about at least 12% earnings per share growth annually over the next several years. What is the, uh, unifying narrative that the bank is offering up right now to explain these new targets?
So, we have a new narrative today and it expands from the old narrative of responsible growth. That is a phrase that CEO Brian Moyahan has used talking about building the bank coming out of the financial crisis. He's talked about using responsible choices and being explicit about the risk that the bank is taking on in order to grow revenue.
Well, today we heard a new phrase. He's been repeating this phrase where he says that the growth is one that they want to stick to the ribs. I know it sounds like a a funny phrase or at least it's one that has stood out to me and it also makes me think of I don't know barbecue or or some sort of food.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- bank investor day
- earnings report
- consumer spending signals
- services pmi
- market outlook
Companies and tickers mentioned
- BAC
- MCD
- Bank of America
- McDonald's
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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