Bank of America ranks second among the largest banks in the U.S. Recently, in an effort to make a comeback from the effects of the U.S. housing tradings crash, the bank has shut down operations on hundreds of branches scattered around the country. Over the past two years, it has also terminated thousands of jobs.
This aggressive move by Bank of America is part of the efforts of Brian Moynihan, BofA chief executive officer, to lessen costs and take advantage of changing to mobile banking. The bank has also humungous legal costs to cover as it continues to battle a long list of lawsuits related to disreputable mortgages before the financial crisis, as per CNN.
Dick Bove, banking analyst at Rafferty Capital, said, "Back in the day, it made sense to open up bank branches all over the country. You couldn't walk down a street in New York without seeing two or three branches."
That was then when banks were luring Americans into branches for safekeeping of their hard-earned money with incentives and free checking accounts.
In recent years, both short and long term interest rates are relatively low. That makes it challenging for banks to turn a profit on the variation between the interest they give on deposits and the numbers earned on loans.
In line with that effort to cut cost and boost revenues, Reuters detailed that Bank of America has been employing additional sales staff in areas of wealth management and commercial lending to uplift earnings that has barely moved for a long time.
The new hires are part of Moynihan's plan to advance the bank to sell more commodity to more clients. That strategy, "cross-selling," can be fruitful if done in the right way. This additional hires will also specialize in sales who can direct customers to other specialists as needed, a change from his previous strategy of training each agent that caters to customers to sell more merchandise.
Instead of a teller promoting a credit card or mortgage to a customer, the bank employees might channel the client to a specialist in home loan.
With this new strategy in place, Bank of America has been slowly climbing back up and the numbers are picking up. The Sydney Morning Herald reported that Bank of America's costs dropped down 25 per cent to $13.8 billion. Its net income rose up to $5.32 billion, equivalent to 45 cents per share, from $2.29 billion, or 19 cents last year
