Tags: BofA | lending | again | dividend

Financial Times: BofA Is Lending Again

By John Morgan   |   Friday, 04 Jan 2013 07:55 AM

Bank of America has launched an effort to boost its mortgage and corporate lending after years of cost cutting and tight reins on capital levels, according to the Financial Times.

CEO Brian Moynihan predicted BofA would eclipse rival JPMorgan Chase in direct-to-consumer mortgage lending in the next six months.

He also told the newspaper he had ordered bankers to be “more aggressive” in lending to companies.

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BofA was the top performer in the Dow Jones Industrial Average in 2012, with a 109 percent increase in its share price, the Times reported.

Moynihan suggested the company would like to commence returning capital to shareholders. But after that step was thwarted by the Federal Reserve in 2011, he did not mention a real timetable.

“The minute I get approval from the Fed, you’ll know,” he said.

BofA improved its capital position in 2012 after years of enduring multibillion-dollar mortgage lawsuits against it, largely stemming from its purchase of Countrywide in 2008.

“Our job is to get them put away at a reasonable basis for shareholders,” Moynihan said of the lawsuits. “Doesn’t mean we won’t fight if people aren’t reasonable. But it’s in our best interests … to get all this stuff behind us.”

BofA has amassed $134.6 billion of tier one common equity, or 8.97 percent of risk-weighted assets, under the new Basel III regulatory standards, according to the Times.

The Wall Street Journal credited Moynihan with following a smart strategy of first shrinking the bloated bank, pruning underperforming and non-strategic assets and cutting back on operating costs.

Now BofA must convince regulators it can produce consistent earnings in order to increase its paltry dividend, The Journal said.

“The bank’s quarterly dividend has been stuck at one penny per share for nearly four years now, and investors are — unsurprisingly — expecting more in the New Year,” The Journal reported.

BofA is expected to submit its next capital plan to the Fed by Jan. 7.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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