Bank of America CEO Brian Moynihan stated on Friday that the bank is planning for a possible recession in 2023, including a scenario in which unemployment rises rapidly.
“Our baseline scenario assumes a mild recession… But we also add a downside scenario, so 95% of our reserve methodology is weighted toward a recessionary environment in 2023,” Moynihan said on a conference call with investors.
According to Moynihan’s pessimistic case, which is more pessimistic than it was last quarter, unemployment will rise to 5.5% early this year and remain at or above 5% through the end of 2024.
The CEO’s statement is consistent with JPMorgan Chase’s earnings report, which forecasts “a mild recession in the central case.”
Bank of America beat expectations on both the top and bottom lines in the fourth quarter, but its $1.1 billion provision for credit losses was a sharp turnaround from a negative figure a year ago.
While net credit charge offs remain below pre-pandemic levels, credit card outstanding balances are up 14% year over year, according to Moynihan, and delinquencies are rising from unusually low pandemic levels.
Bank of America’s stock was up less than 1% on Friday.
