Bank Of America Corporation · NYSE:BAC

Bank Of America — Bank of America Corp /De/ (Bac, Bac-Pb, Bac-Pe, Bac-Pk, Bac-Pl, Bac-Pm, Bac-Pn, Bac-Po, Bac-Pp, Bml-Pg, Bml-Ph, Bml-Pj, Bml-Pl) — Q3 2018 Earnings Presentation

29 slides from Bank Of America's earnings presentation, Oct 15, 2018

  1. Slide 1: Bank of America 3Q18 Financial Results

    Bank of America 3Q18 Financial Results October 15, 2018

  2. Slide 2: Third Quarter 2018 Highlights

    Third Quarter 2018 Highlights (Comparisons to 3Q17) Earnings 1 Returns and Efficiency • Diluted earnings per share of $0.66, up 43% • Return on average assets of 1.23%, improved 28 bps • Record net income of $7.2B, up 32% • Return on average common shareholders’ equity of 11.0%, increased 310 bps •

  3. Slide 3: Operating Leverage Trend

    Operating Leverage Trend Positive Operating Leverage for 15 Consecutive Quarters 1 +22% +21% +29% +3% +8% +3% +5% +6% +8% +6% +3% +8% 2 +5% +4% +7% Reported revenue growth of 2% and operating leverage of 3% 7% 7% 7%2 4% 4% 3% 2% 2% 1% 1% 1% (1%) (1%) (1%) (2%) (2%) (1%) (1%) (2%) (3%) (2%) (2%) (4%)

  4. Slide 4: Investing for the Future

    Investing for the Future Technology • Consistent $3B annual technology new initiative investment spend since 2012 1 • Enhanced CashPro Mobile (+180% users YoY) and CashPro Assistant AI and predictive • Launched industry’s only AI virtual assistant (Erica); 3.4MM users since 2Q18 rollout analytics ca

  5. Slide 5: Financial Results Summary

    Financial Results Summary Income Statement ($B, except per share data) 3Q18 3Q17 % Inc / (Dec) Total revenue, net of interest expense $22.8 $21.8 4 % Noninterest expense 13.1 13.4 (2) Provision for credit losses 0.7 0.8 (14) Pretax income 9.0 7.6 18 Income tax expense 1.8 2.2 (16) Net income $7.2 $5

  6. Slide 6: Balance Sheet, Liquidity and Capital

    Balance Sheet, Liquidity and Capital (EOP basis unless noted) 3 Basel 3 Capital ($B) 3Q18 2Q18 3Q17 Balance Sheet ($B) 3Q18 2Q18 3Q17 Common equity tier 1 capital (CET1) $164.4 $164.9 $173.6 Total assets $2,338.8 $2,291.7 $2,284.2 Standardized approach Total loans and leases 929.8 935.8 927.1 Risk-w

  7. Slide 7: Average Deposits

    Average Deposits Bank of America Ranked #1 in U.S. Deposit Market Share 1 Total Corporation ($B) Consumer Banking ($B) 3-yr CAGR 3-yr CAGR $1,500 $1,316 +4% +7% $1,272 $800 $688 $1,159 $1,227 $659 (0%) $606 $556 +8% 437 423 $600 181 194 $1,000 439 166 424 152 +7% $400 151 163 +11% 119 136 $500 894 +

  8. Slide 8: Average Loans and Leases

    Average Loans and Leases Total Loans and Leases ($B) Total Loans and Leases in All Other ($B) YoY YoY +1% (22%) $1,000 $918 $928 $932 $935 $931 $100 $77 $800 $71 $68 $63 $60 15 14 $600 13 12 $50 12 $400 62 58 55 51 $200 48 $0 $0 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Residential mortgage

  9. Slide 9: Asset Quality

    Asset Quality Net Charge-offs ($MM) 1 • Total net charge-offs decreased $64MM from 2Q18; net charge- $1,500 1.0% $1,237 off ratio declined 3 bps to 0.40% $996 – Consumer net charge-offs decreased $54MM, reflecting $911 $932 $1,000 $900 seasonally lower losses in credit card 0.53% 0.5% . Net charge-o

  10. Slide 10: Asset Quality – Consumer and Commercial Portfolios

    Asset Quality – Consumer and Commercial Portfolios Consumer Net Charge-offs ($MM) Consumer Metrics ($MM) 3Q18 2Q18 3Q17 $1,000 2.0% Provision $710 $757 $730 $830 $830 $731 $769 $776 Nonperforming loans and leases 4,306 4,639 5,252 $750 1.5% % of loans and leases 1 0.97 % 1.03 % 1.17 % $500 1.0% Cons

  11. Slide 11: Net Interest Income

    Net Interest Income Net Interest Income (FTE, $B) 1 1 $15 • Net interest income of $11.9B ($12.0B FTE ) $11.4 $11.7 $11.8 $11.8 $12.0 – Increased $0.7B from 3Q17, reflecting the benefits from higher interest rates and loan and deposit growth, partially $10 offset by higher funding costs in Global Ma

  12. Slide 12: Expense and Efficiency

    Expense and Efficiency Total Noninterest Expense ($B) • Total noninterest expense of $13.1B declined $327MM, or 2%, $16 $13.4 $13.3 $13.9 $13.3 $13.1 from 3Q17, due to broad-based improvements in both personnel and non-personnel expense $12 5.4 5.6 5.7 5.3 5.3 – Noninterest expense declined $217MM f

  13. Slide 13: Consumer Banking

    Consumer Banking Inc / (Dec) • Net income of $3.1B increased 49% from 3Q17; ROAAC of 33% Summary Income Statement ($MM) 1 3Q18 2Q18 3Q17 – 10% operating leverage (19th consecutive quarter of positive Total revenue, net of interest expense $9,403 $192 $629 operating leverage) Provision for credit los

  14. Slide 14: Consumer Banking Trends

    Consumer Banking Trends Business Leadership 1 Total Revenue ($B) 2 Total Expense ($B) and Efficiency 2 • #1 Consumer Deposit Market Share A $9.4 • 2018 J.D. Power Certified Mobile App $10 $8.8 $9.0 $9.0 $9.2 $5 $4.5 $4.5 $4.5 $4.4 $4.4 70% • Named North America's Best Digital Bank B $8 2.6 2.5 $4 C

  15. Slide 15: Consumer Banking Digital Usage Trends

    Consumer Banking Digital Usage Trends 1 Active Digital Banking Users (MM) Total Payments ($B) Person-to-Person Payments (Zelle) 4 CAGR 3.4MM Erica users since launch in April 2018 +6% $800 $698 50 $30 $612 $644 42.5 40 34.5 36.2 $592 40 31.0 32.8 $600 +1% 4.3MM users, up 323 2.1x since launch $20 30

  16. Slide 16: Global Wealth & Investment Management

    Global Wealth & Investment Management Inc / (Dec) Summary Income Statement ($MM) 1 3Q18 2Q18 3Q17 Net income of $1.0B increased 31% from 3Q17; ROAAC of 28% Total revenue, net of interest expense $4,783 $74 $163 • Provision for credit losses 13 1 (3) – Strong pretax margin of 28%, up from 27% in 3Q17

  17. Slide 17: Global Wealth & Investment Management Trends

    Global Wealth & Investment Management Trends Business Leadership 1 Average Deposits ($B) Average Loans and Leases ($B) • #1 U.S. wealth management market position $300 I $180 $159 $161 $162 across client assets, deposits and loans $240 $240 $243 $236 $238 $154 $157 $250 3 3 3 3 • #1 in personal trus

  18. Slide 18: Global Banking

    Global Banking Inc/(Dec) • Net income of $2.0B increased 13% from 3Q17; ROAAC of 19% Summary Income Statement ($MM) 1 3Q18 2Q18 3Q17 Total revenue, net of interest expense 2 $4,738 ($184) ($249) • Revenue of $4.7B decreased 5% from 3Q17 Provision (benefit) for credit losses (70) (47) (118) – Reflect

  19. Slide 19: Global Banking Trends

    Global Banking Trends Business Leadership 1 Average Deposits ($B) Average Loans and Leases ($B) • North America’s Best Bank for Small to Medium-sized B $400 Enterprises $400 $346 $350 $352 $355 $353 $330 $324 $323 $338 • Most Innovative Investment Bank of the Year and Best $316 17 17 17 16 K 18 Bank

  20. Slide 20: Global Markets

    Global Markets Inc/(Dec) • Net income of $0.9B increased 21% from 3Q17; ROAAC of 10% Summary Income Statement ($MM) 1 3Q18 2Q18 3Q17 2 – Excluding net DVA, net income of $1.0B increased 28% Total revenue, net of interest expense $3,843 ($378) ($58) • [ Bullets to come ] Net DVA (99) 80 (78) • Revenu

  21. Slide 21: Global Markets Trends and Revenue Mix

    Global Markets Trends and Revenue Mix Business Leadership 1 2018 YTD Global Markets Revenue Mix 2018 YTD Total FICC S&T Revenue Mix (excl. net DVA) 2 (excl. net DVA) 2 • Best Bank for Markets in Asia P • European Trading House of the Year Q • Equity Derivatives House of the Year R • #1 Equity Portfo

  22. Slide 22: All Other

    All Other 1 Inc/(Dec) Summary Income Statement ($MM) 2 3Q18 2Q18 3Q17 • Net income of $0.1B improved $0.1B from 3Q17 Total revenue, net of interest expense $161 $461 $364 • Revenue improved $0.4B from 3Q17, reflecting lower provision Provision (benefit) for credit losses (95) 10 96 for representatio

  23. Slide 23: Third Quarter 2018 Key Takeaways

    Third Quarter 2018 Key Takeaways • Record earnings while driving responsible growth; pretax earnings up 18% from 3Q17 • Continued investments in the franchise • Positive operating leverage for 15 consecutive quarters; grew revenue 4% and reduced expenses 2% from 3Q17 • Solid client activity drove gr

  24. Slide 24: Appendix

    Appendix

  25. Slide 25: Notes

    Notes A Global Liquidity Sources (GLS) include cash and high-quality, liquid, unencumbered securities, limited to U.S. government securities, U.S. agency securities, U.S. agency MBS, and a select group of non-U.S. government and supranational securities, and are readily available to meet funding req

  26. Slide 26: Sources

    Sources A Estimated retail consumer deposits based on June 30, 2018 FDIC deposit data. B Euromoney, 2018. C Dynatrace 2Q18 Online Banker Scorecard, Javelin 2018 Online Banking Scorecard, Dynatrace 3Q18 Mobile Banking Scorecard, and Javelin 2017 Mobile Banking Scorecard. D Forrester 2018 Banking Sale

  27. Slide 27: Forward-Looking Statements

    Forward-Looking Statements Bank of America Corporation (the “Company”) and its management may make certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do n

  28. Slide 28: Important Presentation Information

    Important Presentation Information • The information contained herein is preliminary and based on Company data available at the time of the earnings presentation. It speaks only as of the particular date or dates included in the accompanying slides. Bank of America does not undertake an obligation t

  29. Slide 29: Bank of America

    Bank of America BANK OF AMER MERRILL LYNCH MERRILL LYN

Bank of America Corp /De/ (Bac, Bac-Pb, Bac-Pe, Bac-Pk, Bac-Pl, Bac-Pm, Bac-Pn, Bac-Po, Bac-Pp, Bml-Pg, Bml-Ph, Bml-Pj, Bml-Pl) — Q3 2018 Earnings Presentation on 6ix