Kenneth D. Lewis, Bank of America Corp.'s chairman and chief executive, said Thursday that its revenue should top $100 billion this year — all the more reason the full nationalization of banks would be a "nightmare."
In his prepared remarks for the Boston Chief Executive Officers' Club, Lewis joined the list of big-bank executives forecasting respectable results this week. He said B of A should post about $50 billion of earnings, excluding taxes and loan-loss provisions.
After his presentation, Lewis told reporters that the company was profitable in January and February. "That kind of cash flow can solve a lot of problems, given time and an improving U.S. economy."
Bank of America also expects to pass the government's stress testing under the capital assistance program, making it unlikely the company will need more capital from the Treasury Department. "While some banks may need more public support in the future, I don't believe we will," he said. B of A is on the hook for $45 billion of preferred stock to the Treasury Department.
Lewis continues to face pressure and calls to resign in response to the acquisition of Merrill Lynch & Co. On Thursday a group representing seven unions wrote in a letter to the New York Supreme Court that it supports efforts by New York Attorney General Andrew Cuomo to force B of A to release more bonus information. CtW Investment Group, which includes the Service Employees International Union, a longtime B of A gadfly, sent a letter to B of A directors demanding Lewis resign.
Lewis did not address the Merrill situation Thursday, but he did agree with his counterparts at JPMorgan Chase & Co. and Citigroup Inc. that the struggling U.S. banking industry is still standing.
"I don't think the industry as a whole is in nearly as dire shape as some would have us believe," Lewis said. "Bank credit has actually increased over the course of this recession, and business lending is trending up modestly so far in 2009."
He also rejected the concept of fully nationalizing banking companies, calling it as a "nightmare" that would "undermine confidence in the financial system and politicize lending decisions."
A day earlier James Dimon, the head of JPMorgan Chase, said he was seeing "modest signs of recovery and healing" in the economy. Dimon also said nationalization "would be a terrible mistake." Vikram Pandit, Citi's CEO, was the first big-bank executive to make upbeat comments this week, writing Monday that his New York company made $8.9 billion in the first two months of this quarter, excluding taxes and credit costs.
Lewis also used his appearance at Boston College to weigh in on investor discontent, which had kept his company's stock below $5 a share for weeks until Thursday, when it rose 18.7% to $5.85. "Stock prices for banks today are largely driven by fear," he said. "Those fears are not irrational, but they also are not reflective of the real strength of the industry."
Though his revenue and profit forecasts may seem like an effort to curtail fear, some said they were risky, given the unpredictable nature of the markets over the next few quarters. Anthony Polini, an analyst at Raymond James Financial Inc., called the willingness to forecast full-year results "a bold move" for the $2.5 trillion-asset company. "I wouldn't see any reason for them to come out with that," Polini said in an interview. "It would be hard to determine that with much certainty."
