Bank of America Cuts More Jobs as Refinancing Demand Flounders
The name of the game over at Bank of America Corp. (NYSE:BAC) recently has been cost cutting. In its third-quarter earnings report, released last week, the bank reported that net income jumped sharply, climbing to $2.5 billion, or 20 cents per share, from $340 million, or zero cents per share, from the year-ago period. With revenues effectively flat at $10.5 billion, the profit gain was led by CEO Brian Moynihan’s aggressive cost-cutting campaign.
The bank’s cost-cutting plan, Project New BAC, was announced in 2011. As part of the program, the bank said it would reduce its headcount by approximately 30,000 people, remove an entire layer of middle management, reduce net expenses by $5 billion through 2014, and generally undertake a massive restructuring of operations to make it more efficient and competitive.
On Thursday, a source familiar with the matter told MarketWatch that Bank of America will be cutting about 3,000 positions from its mortgage business as part of its cost-cutting campaign. The cuts come as refinancing volume declines in the wake of climbing mortgage rates. Between the beginning of May and the end of June, the average interest rate for a 30-year fixed-rate mortgage surged from 3.59 percent to 4.68 percent.