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Bank managers are “cautious” going into 2024

Bank executives expressed caution when speaking at Goldman Sachs’ U.S. financial services conference in Manhattan on Tuesday.

As David Hollerith of Yahoo Finance reports:

Executives at some of the nation’s largest banks pointed to the resilience of the U.S. economy but warned that loan losses are likely to continue and urged caution about the outlook for 2024.

“2023 was an interesting year,” said David Solomon, CEO of Goldman Sachs (GS). Solomon outlined concerns facing financial institutions this year, including a regional banking crisis in the spring, a rapid rise in interest rates and geopolitical risks.

For the U.S. economy, Solomon said “the likelihood of a soft landing is much higher,” referring to the idea that the Federal Reserve could bring inflation back to its 2% target without triggering a recession. Still, Solomon said they need to remain “cautious” as the company approaches 2024.

Bank of America (BAC) CEO Brian Moynihan was firmer in his assessment of the economy, saying: “The economy has entered a soft landing. She’s prepared.”

Moynihan noted that the company’s data showed consumer spending is growing at a pace of about 4%, less than half of the 9% growth from 2021 to 2022.

“The way customers spend their money is balanced,” Moynihan said. “It’s not a question of credit risk. It’s just her appetite.” [for] Credit scores have dropped.

Bank of America expects the Fed to cut interest rates two or three times next year and four times in 2025.

“This value will be higher for a longer period of time, but higher given that we have won the war against inflation, so to speak,” Moynihan said. “We now have to be careful that we don’t gain too much of a lead.”

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