Monday, April 20, 2009

BofA CEO: "Credit is bad, going to get worse"

by Bill McBride on 4/20/2009 10:35:00 AM

BofA CEO Ken Lewis on conference call:
[L]et me make a couple comments about our given environment. Credit is bad and we believe credit is going to get worse before it will eventually stabilize and improve. Whether that turn is later this year or in the first half of 2010, I'm not going to hazard a guess ... For the rest of the year we look for charge-offs to continue to trend upward. I think it will be at a slower pace than we've experienced. Reserve build will also continue for the next couple quarters though not at the level we experienced this quarter. From an economic standpoint we believe we can see weak but positive GDP growth by the fourth quarter this year. I have to say that even our internal economists are a little at odds as to the timing, with some seeing recovery earlier. However, we think it prudent to run the company under an expectation it will be later in the year or early next year. We believe unemployment levels won't peak until next year at somewhere in the high single digits. At this point we don't see unemployment meeting or exceeding 10% but that will of course be impact by how long the economy stays in recession.
emphasis added

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