Indian Economy In Great Position; Consumption Story Growing: BofA CEO Moynihan
Bullish about India, global giant Bank of America's Chief Executive Officer Brian T Moynihan has said the Indian economy is in a great position with a growing consumption story and a lot of untapped potential in terms of its big young population and a large talent pool.
He also expressed confidence about the U.S. growth and the overall world economy, citing the estimates of his research team for a 3.2 percent growth for the global economy and 1.7 percent for the U.S. in 2020.
"Overall, we feel good about the world. It is a slow growth environment and we have to make our way around it," Moynihan told PTI in an interview.
About the U.S., he said, "we are the biggest economy in the world and we are still growing. These are good things".
Moynihan was in Davos last week for the World Economic Forum Annual Meeting 2020.
Asked about the demographic dividends and other growth prospects for India, the top banker said, "the best thing about your country is, it is big, it is growing, the population is young, the education continues to improve and you have a huge talent pool."
"You have skills and competence for services economy. For future generations, the labour arbitrage may not be the same in terms of voice-based call centres etc, which may have gone out of the system. But that is switching more towards a knowledge economy, and towards the fourth industrial revolution areas."
He said the Indian economy is in a great position and the consumption story is growing there.
Moynihan, who leads a team of more than 2 lakh employees serving investors and customers across the U.S. and around the world, said the corporates and the countries keep training their people for new skills required for the next phase of growth and same has been the case for even Bank of America for its operations, including at its Indian centres.
"We have made people more competitive with our own training. That's what we need to do as responsible corporates. When we hire a person, it is not for just one job, but for all kinds of potential jobs over a long period of time. For example, the number of people manning teller machines in banks may have come down, but there are more number of relationship managers now. Every country has to think of how to keep their people relevant on skillsets."
"Our teams in India have been doing great and running the businesses very efficiently there."
Asked about the change he has noticed since last WEF annual meeting in 2019 regarding global economy and trade etc, Moynihan said, "On economy, our research team's estimate for the world is 3.2 percent growth (up from 3.1 percent) for this upcoming year. Their estimate for the U.S. is 1.7 percent."
"What's going on around the world is you are seeing sort of concerns around China during the course of 2019, but with the trade deal being worked out, people are feeling better. In U.S., what we see is 1.7 percent growth, that's a very solid rate right now. Job formation is strong, wages are growing, unemployment is at all-time low, new claims for unemployment are numerically at the lowest level in 30-plus years,” he said.
"On consumer spending side in the U.S., in our customer base which is about $3 trillion dollar of activity a year, the debit/card usage, money taken out of ATMs, cheques, bill payments etc, all those usage of cash, there the money used is $3 trillion a year, which is pretty big and much bigger than the size of some economies."
Bank of America reported full-year net income of $27.4 billion and total revenue of $91.2 billion for 2019.
The company delivered for shareholders in a big way in 2019 by returning a record $34 billion in excess capital through dividends and share repurchases. At the end of fourth quarter its customer deposits surpassed $1.4 trillion and client balances in its wealth management business topped $3 trillion.
Moynihan said businesses in the U.S. during the course of 2019 saw some slowdown in the capital spending, but "that was some levelling out after tax reforms and there is a slight growth there also".
"Resolution on some issues like trade are happening, starting with China. If you look at the present U.S. administration, they may be tough negotiators, but they can do a deal. Going forward, it looks that deals with the U.K. and Europe can be done too. These are good things in terms of business confidence," he said.
Talking about other major economies, Moynihan said China for the first time ever might see a growth of slightly below 6 percent or right around 6 percent.
"The China trade deal actually helps Europe too because there is a lot of connectivity in their economies. For India, we are probably more bullish and we expect 6 percent. Our team is bullish on India and that's a sizeable economy. There is some clarity on Brexit though there is still some uncertainty attached about what happens next," he said.
Moynihan said tax reforms have helped a lot, among other factors, to make the U.S. more attractive.
"I think it was very good for the U.S. to get a competitive tax rate. It has taken off the table a lot many things and has made the U.S. more attractive. Here you can hear people in Davos talking about the U.S. with a lot more enthusiasm because of America's attractiveness and that's probably because of the tax reforms too."