Bank of America CEO: Shortages are affecting credit

In a new interview with Yahoo Finance’s Julie Hyman, Bank of America CEO Brian Moynihan discusses the health of the American consumer and notes that the supply chain shortages may be affecting people's credit.

Video Transcript

JULIE HYMAN: I want to get back to consumer spending for a minute or the health of the consumer, if you will, and how it relates to the bank, what we saw last quarter from you all. So last quarter, you guys really got a boost, as did many of your peers from investment banking advisory fees, from equities trading. That was another strong area for Bank of America. Loan growth has still not quite come back. What signs are you seeing that it may? When do you expect it to happen? And kind of, what do you see percolate through your business?

BRIAN MOYNIHAN: Well, the good news is, as I said a little bit earlier, if you go from first quarter to second quarter to third quarter now that we're-- have now saw three of them, you saw at the end of the first quarter, we could see the stabilization. And then we saw a growth in the second quarter. And we saw that growth really at twice the annualized rate in the third quarter, second to third quarter. And that's good news.

Now, and year over year, basically, loans are flat now. So the trough is formed, and now you're coming out of it. And but it's a demand question. And it's interesting. So what do I mean by that? The line usage by our commercial clients, whether they're small companies or medium-sized companies, large companies-- and we serve a lot of all those-- the line usage, the amount they draw as a percentage of their line commitments, so 100% commitment, they used to draw at close to 40% of that on average. Now they're drawing 30.

Now why is that true? They basically were very careful during the pandemic not to overextend themselves. They are now only gathering employees back to do the work. Frankly, the shortages in the supply chain means they don't-- they can't get hold of materials to buy to put up on those lines. They wish they could use those lines to do that. And things like auto inventories, because we finance a lot of people who sell cars for their businesses, are way down because the inventories are low.

So I think these shortages are affecting credit. But the good news is, at Bank of America, second quarter, third quarter, we saw loans grow. And we continue to see the loan growth into the-- as we go into the fourth quarter here through over the weekend. We still are seeing all that loan growth hold and then grow beyond that, which is good news.