00:00How is Bank of America capitalizing on AI and how will that shape the bank five years from now?
00:06Oh, and thanks. Good to have you. Good to have me here. And it's great to be here in Singapore.
00:11In many ways. We've been at this for many, many years. And with the latest technology,
00:16we're really leaning in and figuring out across so many different vectors because we're so big,
00:20ways that we can really use it to drive change. So we're excited about that.
00:24But some say that AI will allow you to be more productive with fewer workers.
00:28Do you see that happening? Fewer but more productive?
00:31Not necessarily. I think maybe in different ways. So, you know, things like how we operate,
00:35how we look at fraud, how we look at onboarding customers, how we get our global markets activities
00:42out there, how we deal with consumers. All of those things are terrific. But there's many ways in which
00:46we could add other value to our customers. So when I think back over 15, 20 years ago in other
00:53areas,
00:53I grew up in the trading business. Technology came in and made a lot of trading systems
00:58automated. But the number of people stayed the same. They started to provide more structured
01:01solutions to clients. You can get more foreign solutions if you go on holiday, choose which
01:06currency to pay in, et cetera. So I think there'll be other ways in which people will benefit.
01:10So when you take a look at your international business, hiring is going to be accelerated on
01:16the back of that as you look at growth? I think that we're planning to try and keep our headcount
01:21around about flat. And what we're doing is, insofar as we're having turnover, we're leaning into that.
01:26So a high percentage of our headcount is actually filled internally. So every time an opportunity
01:31comes up, we look around internally and see if somebody wants to do that. Internationally,
01:35we have been growing. Our headcount has gone outside the years from about 15, 16 to about 18,000.
01:40It's been an area of real growth for us, which is great. We have another group of about 30,000
01:45colleagues in India. And I think we'll be looking to add to that depending on which countries show
01:49where the opportunities are. The Iran war is the other preoccupation for investors. How are your
01:55clients looking at it? Are they looking past the Iran war already? Because when you take a look at
01:59the market, that certainly is the case. Yeah. Everybody is looking at it, figuring out what it means,
02:05what might it mean. Our research has revised down our growth estimates in the US and around the world
02:10slightly, maybe slightly less in China. And we've revised up inflation more than 140 basis points
02:16in Europe, for example. So we really see an inflation shock coming through to some extent,
02:20and we see growth mitigated. We think maybe in 27, with low oil, there might be slightly higher.
02:25So we've revised up some of the back-end growth there. So we're all trying to figure that out.
02:30I think companies are going through to figure out what does that mean for their supply chains,
02:33what their input costs are. So a lot of work going on in the corporate sector around what this
02:37costumism, you think? I mean, oil in excess of 100 bucks a barrel, at some point, that would have
02:41an impact on the earnings outlook for companies. And we're not even seeing revision downwards for
02:46earnings of companies. Yeah. Everybody's wondering that and wondering why the markets are not where
02:51they are. I think that you could take the view to sort of say, well, I can't price in really
02:57at the
02:58back-end what's happening. I can price in some of the short-end. Over two to three months, I can
03:02see a
03:02scenario where there are supply constraints and there are price constraints. But if I can work
03:06through that, perhaps the rest of the year might look like A, B or C. So there's a sense in
03:13which
03:14you can make an argument that on the current trajectory and imply what you think the duration
03:20of this conflict might be. And some people might say that, well, it's assuming a sort of
03:26July, June, July, August sort of settlement for molecules and for energy to start flowing back
03:32through. Whether that turns out to be the case, we'll see. And in terms of capital flows, what are
03:36you seeing? People talk about how that flow may be coming to Asia because of growth. But yet Asia is
03:42stuck at the center of this Iran war because of its dependence on oil from the Middle East.
03:48Yeah. I was checking some numbers. I don't know if these are absolutely accurate. But
03:55energy as an input cost is about 9% of GDP in the 70s when we had the last oil
04:00shock. It's about 4% or
04:015% now. So it's slightly less. So if you look across Asia, absolutely, that energy shock is coming
04:06through. And it's just quite energy dependent. And it's relatively short of energy. But all of the
04:11other growth opportunities around Asia, the talent, the growth of infrastructure,
04:16the emergence of new companies is all, you know, that will remain. And I think Asia actually is
04:22well placed to adjust for different energy sources, different energy mixes. So I remain
04:27really bullish on Asia. But are you seeing capital flows coming to Asia on the back of what you have
04:32just mentioned? Oh, yeah. I think that there's a lot of interest in what, you know, how Asia is
04:36evolving. Now, Asia historically has been an exporter of capital because Asia has such a high savings
04:40rate. Typically, it's taking that capital, invested in the global capital markets where there's
04:44liquidity. But underlying that in terms of new corporate, new ways of catering to the Asian
04:51consumer and the growth in Asian capital markets as well, if you take Hong Kong, China, Australia,
04:56Japan, it's really terrific opportunities.
04:59Bernie, I want to talk about private credit. I was curious to hear that you're pretty comfortable
05:03with what's happening right now because you say it is a healthy cleanup. And Bank of America is
05:08committing $25 billion in the private credit space. Where exactly? And why exactly?
05:14Well, look, naturally, we'll probably start in the US. That's where we, you know, we have a great
05:18customer base and we have all of our clients on a lot of the corporate side. But we have an
05:24incredible corporate and commercial base outside the US as well. So we'll naturally start there.
05:29But we're looking globally at the opportunities. I think the point with private credit is there's been a lot
05:34of discussion and speculation around it. I think that means that people are rethinking through where are
05:38things priced, what's the liquidity. And as long as there's time for that to work out and it isn't a
05:42shock,
05:43that's what I meant by the fact that then things will settle. So we're not complacent about it per se.
05:47We're just saying that that breath of, not fresh air, but that sort of perspective allows us to really make
05:54sure the portfolio is in good shape. So for us, we weren't rushing into it. We're very much not taking
06:00the view
06:01that because we have a private pool, we should deploy it. We're saying what do our clients want
06:04and need? What are those structures bringing to the marketplace that a traditional syndicated loan
06:09or corporate market solution doesn't provide? And we're saying we're there with the balance sheet
06:13if that's needed. People say, though, that when you take a look at private credit, Asia is a place
06:17to be right now. It is seen as a safe haven and it is a growing, you know, asset in
06:23this part of the
06:24world because of the low base. What are your thoughts on private credit in Asia? Where are the
06:28opportunities? Might Japan be the place to be as well? Yeah, I think that I agree that this option is
06:34actually
06:34as you were talking, I was thinking 25 years ago. I lived in Asia and actually there was a there
06:38was a sort of private
06:40credit market then. There was a convertible bond market and other markets us. They're fast growing companies. I think
06:46those needs will arise. I'm particularly excited about Southeast Asia. I think that whole area is doing really well and
06:51growing very well. Japan has a terrific banking sector that had for a long time because of relative low
06:58growth had been, had seen loan rates, utilization rates pretty low. So it seems to me, I may be wrong,
07:06but it seems to me that the initial phase of regrowth in Japan, which is happening now, will probably come
07:10through the regular banking channels. But at the margin, they'll always be innovative capital solutions.
07:15Are there sectors which are more attractive than the others? Oh gosh, across Asia, I mean, I think coming back
07:22to
07:22technology, there's so many interesting technology areas that are coming through in Asia. In Japan, I think
07:29in the, you know, in the, in the, and in East Asia, in the robotics sector, in the, in the
07:34machine sector, I think
07:35there's a lot of interest there. And then of course, areas like biotech coming out of, you know, China, Hong
07:41Kong,
07:41Japan as well. It's super interesting. And AI is one space that is seeing a lot of debate because of
07:46the massive capex. There's still a debate whether or not, you know, we're going to see a bubble and a
07:51bubble bursting. Your thoughts on that? And can that capex be sustained? Well, it's interesting. That's one
07:56of the reasons why we're here today. You know, we started this technology dialogue five years ago
08:01because we thought the evolution is at such a fast pace. It's impacting us. We need to figure out where
08:06it's going, what direction to move in. And if you think about it, the last three, four years, it's
08:10moved in so many different directions now. Agente, we weren't talking about two, three years ago.
08:15People talking about physical AI, all of those things. So there's a lot of investment going in.
08:19Will it get the right return on investments on, on the different bits of investment, for example,
08:24in data centers? You know, we'll, we'll have to see. But as to whether there are real use cases,
08:29real benefits, absolutely. You know, we, we have 60, 70 million consumer clients in the US. We don't do
08:35consumer banking outside the US. And they're using our, our, our virtual assistants, our AI
08:41general assistants more and more and more every year, you know, tens of millions, hundreds of
08:46millions, billions of transactions. We're getting to a year in terms of their, their banking needs.
08:51And I think that will proliferate, you know, around the world.
08:53Bernie, just one final question before we let you go. I mean, what are you advising clients to do
08:58with their money? Where are the biggest opportunities? Shut somebody so that we can
09:02make money too. Absolutely. Well, you know, it depends, it depends where you are. I would say
09:06that, look, over the medium term, and particularly in Asia, where we are, there's so many opportunities.
09:12It's, the demographics are terrific. And a lot of smart, young people as well coming through.
09:19And I think that that combination means that there's opportunities. Now, what we want is for
09:23those companies to be available for people to invest in, whether it's through the stock markets,
09:28whether it's through private credit, whether it's through the banking sector. So I think there'll
09:32be terrific opportunities in Asia.
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