1. One of the key themes of the 2007 World Economic Forum in Davos is driving growth. How does your bank propose to drive growth in the coming year?
Bank of America will focus on our best opportunities where our scale, powerful distribution and customer knowledge will differentiate us with clients and customers.
We have identified areas such as small business lending, capital markets and mass affluent financial services where we are small compared to our shares of other businesses and can offer value-added services and products to targeted clients. While the headwinds of margin compression and higher credit costs will make growth harder to achieve in 2007, we believe that serving customers well and focusing on our best opportunities will drive future shareholder value.
2. What are the main challenges facing the global economy in 2007 and how will your bank cope with them?
Our business is primarily in the US where we believe the economy will grow somewhat below its long-term trend of 3% during 2007. The challenges include significantly higher energy costs, a weakened housing market and reduced consumer confidence.
That said, business balance sheets and profitability are strong, consumer income is holding up nicely and we think interest rates are at or near their peak. Given our diversity of revenue sources, both geographically and by client group, Bank of America is well positioned to deal with slower economic growth.
3. These days, a global bank’s brand is one of its key assets. Can you describe your bank’s approach to managing brand value?
We view our brand as both a promise and a competitive edge. It’s who we are, what we stand for and what our existing and potential customers understand about us. People are much more likely to do business with a company they know and trust, and that’s especially true in financial services.
We work hard to ensure that whenever people encounter the Bank of America brand, their experience is positive and consistent. From the products and services we offer, to the events and programmes we sponsor, we apply rigorous risk management discipline and usage standards to ensure our brand is appropriately represented.
We measure our success. From voice of the customer and associate to brand scorecard and other brand effectiveness measurements, we regularly assess the impact our brand, community investments and philanthropic involvement have on customer loyalty, brand consideration and community perception – and adjust to meet and anticipate needs.
4. Climate change is now firmly on the mainstream political and business agenda. Can you tell us about any initiatives that your institution is taking on this or other environmental issues?
At Bank of America, we apply business practices to good environmental behaviour.
In looking at climate change, we have set aggressive, voluntary goals to reduce GHG emissions company-wide 9% by 2009 through the reduction of energy consumption. On track for this target, we reduced electric consumption 4% last year.
Other initiatives impacting climate change include:
- The company is building the Bank of America Tower, which will be the world’s most environmentally sound skyscraper.
- From 2000-2005, the company reduced paper usage 32% even as the bank’s customer base grew 24%.
- Annually, the bank recycles nearly 30,000 tons of paper, effectively recycling more paper than it uses for internal operations.
- The company has changed the mix of its energy and utility loan portfolio and has added customers using renewable energy sources.
5. Bank chairmen and CEOs are natural optimists. What reasons do you have for being optimistic in 2007?
We believe the economy will continue to grow and that the characteristics that differentiate Bank of America – including scale, powerful distribution, customer knowledge and operating effectiveness – will make a difference in the marketplace. With an efficiency ratio below 50%, we can bring more revenue to the bottom line than almost any other large competitor.
With greater penetration of almost any group of customers you can name in the US, Bank of America has the ability to expand our share of wallet by continuing to provide innovative solutions to meet customers’ financial needs. And by focusing on areas – including the wholesale markets in Europe and Asia – where we have untapped opportunities, we can grow faster than the world economy.
We believe Bank of America has the right model and is in the best markets for financial services in the world. I have never been more optimistic about our future.
