CHARLOTTE, North Carolina (Reuters) - Bank of America Corp (BAC.N) Chief Executive Brian Moynihan said on Wednesday the company’s decision to eliminate overdraft fees on debit card transactions will “give up a lot of revenue” for the largest U.S. bank by assets.
Late Tuesday, Bank of America announced plans to suspend overdraft fee charges on all debit card transactions, beginning this summer. Instead, the bank will simply reject transactions for more than the customer has in their account.
“The $35 cup of coffee at Bank of America is gone,” Moynihan said, speaking at Citigroup Inc’s Financial Services Conference in New York City, referring to the overdraft fee customers could be charged for overdrawing on small transactions.
The move is the latest in a series of changes the bank has made over the last year to clarify its mortgage and credit card agreements with customers since a first curb of overdraft fees last September.
Debit card overdraft charges accounted for 60 percent of all overdraft transactions, the company said on Tuesday.
Moynihan said the company will look to offset the lost revenue through reducing customer turnover, and by pricing its deposit accounts appropriately.
After the first round of overdraft curbs, the company reported during its fourth quarter 2009 earnings presentation that fee income declined by $160 million.
Moynihan said the company is focused on repairing its reputation and image with consumers to “pre-crisis, pre-recession” levels of trust.
Moynihan blamed the reputation hit on a sales strategy that pushed products and services on bank customers that turned problematic during the financial crisis.
Bank of America has spent the last year moving away from selling customers services and financial products they might not need, he said.
“We’re focusing now on customer relationships over sales,” Moynihan said.
In the short term, Moynihan said the bank’s earnings will be driven by the movements of the U.S. economy.
Longer term, he said, revenue growth will depend on the company’s ability to sell its existing suite of services to customers, though it will be still be tied to broader economic forces.
“We’re going to reflect the broader economy,” he said.
Reporting by Joe Rauch, editing by Matthew Lewis and Gerald E. McCormick