BANK OF AMERICA CORP /DE/ Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Highlights: Bank of America reported $7.4 billion in net income and $0.90 in EPS for Q1 2025. Revenue grew 6% year over year, net income up 11%, and EPS up 18%. Deposits grew for the seventh straight quarter, reaching nearly $2 trillion. Commercial loans grew across all lines of business for the second consecutive quarter. Consumer banking had 25th straight quarter of net new checking accounts, and wealth management added 7,200 net new households with $24 billion in net AUM flows.
• Organic Growth: Organic growth remained strong across businesses. Digital engagement expanded, with Erika having over 2.7 billion interactions since inception and more than 14 billion logins in 2024. The Cash Pro app for commercial customers had strong adoption, and digitally enabled sales in consumer products reached 65% of total sales.
• Balance Sheet: Assets ended the quarter at $3.35 trillion, up $88 billion from Q4. Loans grew $15 billion, deposits exceeded loan growth, regulatory capital was $201 billion, and the CET1 ratio was 11.8%, well above requirements.

Segment Performance

• Consumer Banking: Generated $10.5 billion in revenue and $2.5 billion in net income in Q1 2025. Revenue grew 3% year-over-year. Deposits increased to $972 billion on an ending basis, up from $928 billion in mid-August. Investment balances grew 9% to $498 billion with full-year flows of $22 billion. The business had nearly 250,000 net new checking accounts this quarter.
• Wealth Management: Reported revenue of $6 billion, growing 8% over the prior year, led by 15% growth in asset management fees. Net income was $1 billion, modestly higher than Q1 2024. Average loans were up 6% year over year, driven by growth in custom lending, securities-based lending, and mortgage lending. Assets under management flows totaled $79 billion over the past twelve months.
• Global Banking: Produced earnings of $1.9 billion, modestly lower than the year-ago quarter. Revenue was $6 billion, flat to the prior year, with lower NII offset by higher other income related to leveraged finance positions and treasury services revenue. Commercial loans grew, but CRE loans declined. Total average global banking deposits were up 9% year over year.
• Global Markets: Earned $1.9 billion, growing 8% year over year. Revenue ex DVA improved 10% from Q1 2024, with sales and trading revenue ex DVA up 9% to $5.6 billion. Equities led growth at 17% year over year, while FIC grew 5%.

Guidance

• NII: Exit rate for NII in Q4 2025 remains unchanged at $15.5 billion to $15.7 billion. Full-year NII is expected to grow 6%-7%.
• Expense: Q1 expense was ~$17.8 billion, including seasonal and market-related costs. Full-year expense growth is expected to be 2%-3%.
• Capital: Flexible with CET1 ratio, and share buybacks increased to $4.5 billion in Q1, with flexibility to adjust based on business needs.

Risks

• Market Volatility: Concerns about economic uncertainty and potential impact of tariff policies on loan demand and economic growth.
• Regulatory Uncertainty: Impact of regulations like the SLR on capital allocation and liquidity provision.
• Economic Uncertainty: Potential slowdown in economic growth and its effect on credit quality and client activity.

Question and Answer

• Q: Stephen Chubach on capital management and loan/deposit growth A: Alastair Borthwick discussed flexibility in CET1 ratio and loan growth driven by investment in commercial bankers and use of AI for efficiency.
• Q: John McDonald on loan loss reserve and expense A: Alastair Borthwick explained reserve setting based on blue chip economic indicators and expense guidance of 2%-3% full-year growth.
• Q: Jim Mitchell on NII outlook and rate sensitivities A: Alastair Borthwick discussed NII target of 2.3% NIM and rate sensitivities, noting impact of rate cuts over time and flexibility in capital deployment.
• Q: Glenn Shore on credit book and regulatory environment A: Brian Moynihan emphasized underwriting discipline and diversification of loan book, and discussed regulatory relief expected from reduced burden.
• Q: Mike Mayo on deregulation and impact on business A: Brian Moynihan talked about expected regulatory relief reducing burden, aiding liquidity provision and client service.