Bank of America Corp (BAC) CEO Brian Moynihan’s Comments Casting Fears of Endemic Weakness In the Banking Sector

Bank of America Corp (NYSE:BAC) CEO Brian Moynihan addressed his industry peers among others on Goldman Sachs Financial Services Conference today and his comments are not exactly what the bank investors needed to hear, thus causing the stock to plummet about 2.5%. On CNBC, Kayla Tausche reported on what she heard from him at the conference.

“[…] Bank of America Corp (NYSE:BAC) CEO and Chairman, Brian Moynihan causing that stock to move when he began his presentation with an overview of Bank of America’s businesses and where it will get its revenues and he commented in particular about the slide in trading revenue in the fourth quarter, compared to the third quarter this year, and the fourth quarter of last year […],” said Tausche

The reason why this is such a great deal for investors in the banking sector is that Bank of America Corp (NYSE:BAC) has proved to be significantly resilient to market volatility of the last year, which was low and resulted in a slowdown in revenues for other banks. However Bank of America did a pretty good job in generating revenues for itself from that department. Hence, as Tausche explained if this particular bank shows a slowdown in this segment, it sends a pretty bearish signal to investors of a possible endemic weakness in the industry as a whole.

Moreover, Moynihan also highlighted the headwind that Bank of America Corp (NYSE:BAC) has been facing from the mortgage industry. He described it as a very difficult business to be in recently. The CEO also expanded on the effect of the lower oil prices that are at record lows and how they will have an impact on the bank’s top line.

“[…] He said that holiday spending was up slightly, but they saw spend on gas on Bank of America Corp (NYSE:BAC) credit and debit fall 14% over the thanks giving weekend and that any weakness that they might see on the corporate side from underwriting and possible credit breakdown of energy companies based on lower oil prices, that is likely, he said to be of set by higher consumer spend in the overall effect of lower gas prices for consumers […],” informed Tausche.

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