Bank of America’s profits will be key in Fed stress test: CEO

NEW YORK, Tue Dec 4, 2012 — Bank of America Corp.’s ability to produce consistent profits will be a key factor in the bank’s upcoming U.S. Federal Reserve stress test, CEO Brian Moynihan said on Tuesday.

The second largest U.S. bank by assets has sufficient capital under new global standards, but its earnings are still being affected by losses from its legacy mortgage business, Moynihan said at an investor conference in New York.

“We need to make sure that we have the recurring earnings stream,” Moynihan said.

Like other big U.S. banks, Bank of America is preparing to submit a capital plan in January for the Fed’s review. The plans can include proposals to increase dividends or repurchase shares.

Bank of America’s need to prove its earnings “track record” will likely dampen its request to return capital to shareholders, Bernstein analyst John McDonald wrote in a report last month. He expects the bank will ask for a quarterly dividend of no more than 2 cents per share and share buybacks of $3 billion.