Bank of America Corp. does not fear losing customers because of its controversial $5 monthly debit fee, Brian Moynihan, BofA CEO, recently told analysts.
Instead, he suggested the fee would provide an incentive for more customers to expand relationships with the bank, including locating their various deposit, mortgage and credit card accounts there to receive a fee waiver.
In response to an analyst’s question during an Oct. 18 conference call to discuss third-quarter earnings, Moynihan said that “a lot of people can qualify” to avoid the $5 fee if they concentrate most of their banking with BofA.
BofA announced its fee plans Sept. 29.
“The issue is when people split their relationship and use our convenience and our access and our 18,000 ATMs and our no foreign ATM fees and our online banking product and all that and yet have their relationship elsewhere,” he said. “That is tough for us to afford to provide, and we need to provide it to all our customers to be competitive.”
The new fee is designed to “get people to bring more of their relationships, so we are comfortable that we will end up in a good dynamic there,” Moynihan added.
Citing fewer credit cardholder defaults and a favorable comparison against a one-time $10.4 billion charge last year, BofA’s Card Services unit reported net income of $1.3 billion, which compares with a $9.84 billion loss during the same period a year ago.
Minus the one-time goodwill impairment charge taken during the third quarter of 2010, BofA’s net income during the quarter ended Sept. 30 more than doubled, increasing 118.9% from $594 million a year ago.
Net interest income declined 20%, to $2.8 billion from $3.5 billion, while income from fees fell 10.5%, to $1.7 billion from $1.9 billion.
