Analysis: Bank of America seeks to boost revenue, but progress slow
By Rick Rothacker
(Reuters) - Bank of America Corp (BAC.N: Quote) has launched a bank-wide initiative to boost revenue, but Chief Executive Brian Moynihan has his work cut out in proving that he can get the bank to grow robustly as it moves past its mortgage problems.
The huge challenge he faces was underlined on Wednesday when the bank, the second-largest U.S. bank by assets, reported that its adjusted revenue in the first quarter fell 8.4 percent to $23.85 billion, as all of the bank's major business segments declined except for wealth management. The bank's revenue has now fallen by more than a quarter since Moynihan came into office.
Moynihan has spent his first three years as CEO fixing mortgage problems arising from the bank's disastrous purchase of Countrywide Financial in 2008,and cutting expenses to boost the bottom line. Now, he says the priority has to be building revenue.
"As the other initiatives go away, this is what the team has to be focused on," Moynihan told Wall Street analysts on a conference call on Wednesday.
This month, he met with about 100 of Bank of America's regional banking executives to talk about strategies for winning more business. These include selling more products to existing customers, increasing referrals among various units and rebuilding the mortgage origination business.
The bank is asking, for example, its commercial bankers to refer entrepreneurs to financial advisers in the wealth management division and to investment bankers who can help them raise capital for their businesses.
Bank of America plans to increase referrals among business units by up to 50 percent each year, Moynihan said. So far, it is on track to hit those goals, he added.
The idea, while attractive to many executives in the industry, is notoriously hard to implement. It requires systems to easily send on and track referrals, compensation structures to give employees an incentive to send customers to other units, and hands-on management to make sure everything is working. For a firm with about 263,000 employees and vast, global operations, that can be surprisingly tricky to get right. Continued...