Bank of America (BAC) is reworking its credit card strategy as the bank boosts its target for profits from its consumer-focused businesses, according to a media report on Thursday.
The bank is set to introduce this month new incentives for cardholders with higher account balances, one of the actions it’s taking to propel annual profit from its consumer unit to $20B by the end of the decade, Bloomberg News reported, citing interviews with BofA executives. The unit’s 2025 net income increased 14% Y/Y to $12.2B.
“The focus is on growth,” Holly O’Neill, head of Bank of America’s consumer business, told Bloomberg. “Card is a big piece of this growth as we move forward and get more targeted with our outreach.”
Bank of America (BAC) is seeking to expand its customer base, leverage data to find and attract new clients efficiently, and reduce expenses. It currently has ~69M consumer customers and operates 3,650 branches across 39 states. It’s targeting 75M consumers by 2030, the article said.
In addition to helping the bank time its outreach to prospective customers, such as when they get married or buy a home, it’s also using artificial intelligence to evaluate their risk for potential default.
Part of the push in the credit card business is to expand partnerships with its existing co-brand partners, such as Alaska Air Group (ALK), Royal Caribbean Cruises (RCL), and Norwegian Cruise Line Holdings (NCLH). Meanwhile, other major credit card lenders such as American Express (AXP) and JPMorgan Chase (JPM) have been spending billions to boost rewards for premium cards and have added new partners for co-brand cards across travel and retail.
Still, Bank of America (BAC) stock dipped 1.6% in Thursday midday trading, as broader markets and the financial sector slumped amid risk-off sentiment.