BANK OF AMERICA CORP /DE/ Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Economic Overview: Economy stable with slower growth and falling inflation. Consumer payments up 4%-5% year-over-year; commercial businesses consistent with lower growth economy.
• Financial Results: Q3 revenue $25.5 billion, net income $6.9 billion. NII troughed in Q2 2024 and grew 2% in Q3, expected to grow in Q4. Fees grew 5%, representing 45% of total revenue.
• Organic Growth: Continued focus on customers and client experience. Consumer added 360,000 net new checking accounts; wealth management added 5,500 net new relationships; global markets had 10th consecutive quarter of year-over-year growth in sales and trading.
• Digital Capabilities: 48 million active digital users, digital sales 54% of total consumer sales, Erica AI virtual assistant reached 2.4 billion interactions, Zelle user and volume growth.

Segment Performance

• Consumer Banking: Generated $2.7 billion in net income in Q3. Had organic growth with 360,000 net new checking accounts added, card openings, and investment balances climbing 28% year-over-year to $497 billion. Loans grew from credit card, small business, and vehicle.
• Wealth Management: Reported revenue of nearly $5.8 billion, up 8% year-over-year, led by 14% growth in asset management fees. Net income rose to $1.1 billion. Added 5,500 Merrill and Private Bank net new households, with over 1/3 of Merrill openings driven by training program graduates.
• Global Banking: Earnings of $1.9 billion, down 26% year-over-year, driven by lower net interest income and higher provision expense. Investment banking fees grew 18% year-over-year, maintaining third position in investment banking fees.
• Global Markets: Earnings of $1.6 billion, up 23% year-over-year, with sales & trading revenue up 12%. Achieved 10th consecutive quarter of quarter-on-quarter improvements in markets revenue.

Guidance

• NII expected to grow in Q4 despite market expectations of rate cuts.
• Expect to return to operating leverage in 2025 as NII grows and expense discipline continues.
• Capital return to shareholders with $5.6 billion returned in Q3, including $3.5 billion share repurchases.

Risks

• External factors affecting the business and economy.
• Impact of unexpected rate changes on NII.
• Regulatory changes affecting capital requirements.

Q: Jim Mitchell asks about NII trajectory and deposit growth.

A: Alastair Borthwick responds on NII expected growth in Q4 and deposit growth stability.

Q: Betsy Graseck asks about deposit impact of rate environment.

A: Brian Moynihan discusses deposit stability and consumer deposit behavior.

Q: Glenn Schorr asks about markets revenue investments.

A: Alastair Borthwick talks about ongoing investments in markets business.

Q: Matt O'Connor asks about share buyback and normalized net interest margin.

A: Alastair Borthwick addresses share buyback plans and NII normalization path.

Q: Mike Mayo asks about efficiency ratio disconnect.

A: Alastair Borthwick explains incentive comp impact on efficiency ratio and outlook for operating leverage.