Bank Of America Corporation · NYSE:BAC
Bank Of America — Q3 2023 Earnings Presentation
43 slides from Bank Of America's earnings presentation, Oct 17, 2023
Slide 1: Bank of America 3Q23 Financial Results
Bank of America 3Q23 Financial Results October 17, 2023
Slide 2: 3Q23 Highlights
3Q23 Highlights Solid earnings Strong balance sheet Consistent returns Deposits $1.9T Return on average increased modestly QoQ common equity Revenue1 $25.2B 11.2% +3% YoY CET1 11.9%2 240 bps above reg. min.3 Return on average Net income $7.8B tangible common equity5 +10% YoY Quarterly dividend 15.5%
Slide 3: 3Q23 Highlights
3Q23 Highlights (Comparisons to 3Q22, unless otherwise noted) • Net income of $7.8B; diluted earnings per share of $0.90; ROE1 11.2%, ROTCE1,2 15.5% • Revenue, net of interest expense, of $25.2B increased $0.7B, or 3% – Net interest income (NII) of $14.4B ($14.5B FTE)2 increased $0.6B, or 4%, driven
Slide 4: Continued Organic Growth in 3Q23
Continued Organic Growth in 3Q23 Consumer Banking Global Wealth & Investment Management Added over 200,000 net new checking accounts; Added ~7,000 net new relationships across Merrill and 19th consecutive quarter of growth Private Bank, up 20% YoY Added 1.1 million credit card accounts1 Assets under
Slide 5: 3Q23 Digital Update
3Q23 Digital Update Creating an innovative digital experience for our clients Digital Adoption %1 Online Mobile Connect API Consumer 74% Merrill Private Bank Global Banking 46MM digital active users 83% 92% 75% and 3.2B digital logins2 Client Engagement 170MM 1.6MM 813K Erica® interactions3 Client-a
Slide 6: Quarterly Operating Leverage
Quarterly Operating Leverage1 29% 22% 21% 3Q23 Revenue: +$0.7B 12% Expense: +$0.5B 8% 8% 8% 7% 7% 7% 6% 6% 6% 6% 5% 5% 4% 4% 4% 4% 4% 3% 3% 2% 3% 2% 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 15 15 15 15 16 16 16 16 17 17 17 17 18 18 1
Slide 7: Weekly Ending Deposit Trends
Weekly Ending Deposit Trends Total Corporation ($B) Consumer Banking ($B) Total $1,885 $1,004 $982 $1,877 Rate paid: 155bps1 Rate paid: 34bps1 $1,500 $600 $1,320 $519 $504 $1,289 $400 $371 $348 $1,000 $200 $131 $115 $588 $565 $500 $0 06/30/23 09/29/23 06/30/23 09/29/23 Interest-bearing Noninterest-b
Slide 8: Potential Impact of Proposed Capital Rules
Potential Impact of Proposed Capital Rules1 Risk Weighted Assets (RWA) 10% Minimum CET1 Capital at Jan 1, 2024 ~20% $1.95T $195B $194B $1.63T $163B 3Q23 2 3Q23 w/ ~20% 3Q23 3Q23 Min. w/ 3Q23 2 Actual RWA Inflation Min. ~20% Inflation Actual Organic Capital Generation ($B) $8.2 $7.8 $7.7 $7.4 $7.0 $7
Slide 9: Global Markets Spotlight
Global Markets Spotlight 2023 YTD: Revenue $15.4B, up 8%; net income $4.0B, up 10% Diversified Efficient Revenue Consistent Business Expansion Growth Returns 1,2 1 S&T Revenue (ex. DVA) Average Assets S&T Revenue (ex. DVA) Return on Avg. by Product Allocated Capital +35% +32% 18% 17% 15% 14% FICC 12
Slide 10: 3Q23 Financial Results
3Q23 Financial Results Summary Income Statement 3Q23 2Q23 Inc / (Dec) 3Q22 Inc / (Dec) ($B, except per share data) Total Revenue, net of interest expense $25.2 $25.2 $— — % $24.5 $0.7 3 % Provision for credit losses 1.2 1.1 0.1 10 0.9 0.3 37 Net charge-offs 0.9 0.9 0.1 7 0.5 0.4 79 Reserve build (re
Slide 11: Balance Sheet, Liquidity, and Capital
Balance Sheet, Liquidity, and Capital (EOP1 basis unless noted) Balance Sheet Metrics 3Q23 2Q23 3Q22 Basel 3 Capital ($B)4 3Q23 2Q23 3Q22 Assets ($B) Common equity tier 1 capital $194 $190 $176 Total assets $3,153 $3,123 $3,073 Standardized approach Total loans and leases 1,049 1,051 1,032 Risk-weig
Slide 12: Average Loan and Lease Trends
Average Loan and Lease Trends Total Loans and Leases ($B) Total Loans and Leases by Portfolio ($B) $1,100 $750 YoY $1,039 $1,041 $1,047 $1,046 +1% $587 $588 $593 $589 $1,034 $585 $1,000 $500 $449 $453 $453 $454 $457 $900 $250 $800 $0 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 Consumer Commerc
Slide 13: Average Deposit Trends
Average Deposit Trends Bank of America Ranked #1 in U.S. Retail Deposit Market Share1 Total Corporation ($B) Consumer Banking ($B) $2,000 $1,963 $1,926 $1,894 $1,875 $1,876 $1,250 $1,069 $1,047 $1,026 QoQ vs. 4Q19 QoQ vs. 4Q19 $1,006 $980 (3%) +36% $1,410 738 681 630 597 565 0% +33% $1,000 $1,500 (5
Slide 14: Managing Excess Deposits
Managing Excess Deposits Deposits in Excess of Loans (EOP, $B) Cash and Securities Portfolios ($B)1 $2.5T $1,248 $1,085 $1,131 280 $885 205 352 285 301 236 $1,085B $601 176 $835B 157 $420B 246 254 683 644 603 338 190 $0.5T 3Q19 3Q20 3Q21 3Q22 3Q23 3Q19 3Q20 3Q21 3Q22 3Q23 Deposits Loans HTM securiti
Slide 15: Net Interest Income Increased $0.6B, or 4% YoY
Net Interest Income Increased $0.6B, or 4% YoY Net Interest Income (FTE, $B)1 • Net interest income of $14.4B ($14.5B FTE)1 increased $0.6B YoY, driven by benefits from higher interest rates and loan growth, partially $14.8 $14.6 $14.3 $14.5 offset by lower deposit balances $15.0 $13.9 – Increased $
Slide 16: Expense and Efficiency
Expense and Efficiency Total Noninterest Expense ($B) Efficiency Ratio $18.0 $16.2 70% $15.3 $15.5 $16.0 $15.8 6.3 6.6 6.3 $12.0 6.4 6.4 65% 63% 64% 62% 63% 62% $6.0 60% 8.9 9.2 9.9 9.4 9.6 $0.0 55% 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 Compensation and benefits Other Headcount (K) • Non
Slide 17: Asset Quality
Asset Quality Net Charge-offs ($MM)1 • Total net charge-offs of $931MM1 increased $62MM from 2Q23 $1,000 $931 0.50% $869 – Consumer net charge-offs of $804MM $807 increased $84MM, driven primarily by higher $800 0.40% $689 credit card losses $600 0.35% 0.30% – Credit card loss rate of 2.72% in 3Q23
Slide 18: Asset Quality – Consumer and Commercial Portfolios
Asset Quality – Consumer and Commercial Portfolios Consumer Net Charge-offs ($MM) Consumer Metrics ($MM) 3Q23 2Q23 3Q22 Provision $1,218 $1,100 $722 $1,000 1.00% Nonperforming loans and leases 2,792 2,729 2,760 $804 $750 $720 0.75% % of loans and leases1 0.61 % 0.60 % 0.61 % $653 0.70% Consumer 30+
Slide 19: Consumer Banking
Consumer Banking Inc / (Dec) • Net income of $2.9B decreased 7% from 3Q22, as strong Summary Income Statement ($MM) 3Q23 2Q23 3Q22 revenue growth was more than offset by higher provision for credit losses and noninterest expense Total revenue, net of interest expense $10,472 ($52) $568 Provision (be
Slide 20: Global Wealth & Investment Management
Global Wealth & Investment Management Inc / (Dec) • Net income of $1.0B decreased 13% from 3Q22 Summary Income Statement ($MM) 3Q23 2Q23 3Q22 – Pretax margin of 26% Total revenue, net of interest expense $5,321 $79 ($108) – Strong organic client activity Provision (benefit) for credit losses (6) (19
Slide 21: Global Banking
Global Banking Inc / (Dec) • Net income of $2.6B increased 26% from 3Q22 Summary Income Statement ($MM) 3Q23 2Q23 3Q22 – Pretax, pre-provision income2 of $3.4B increased Total revenue, net of interest expense1 $6,203 ($259) $612 16% from 3Q22 Provision (benefit) for credit losses (119) (128) (289) •
Slide 22: Global Markets
Global Markets1 Inc / (Dec) • Net income of $1.2B increased 17% from 3Q22 Summary Income Statement ($MM) 3Q23 2Q23 3Q22 – Excluding net DVA, net income of $1.3B Total revenue, net of interest expense2 $4,942 $71 $459 increased 17%3 Net DVA (16) 86 (2) • Revenue of $4.9B increased 10% from 3Q22, driv
Slide 23: All Other
All Other1 Inc/(Dec) • Net income of $89MM increased $370MM vs. 3Q22, Summary Income Statement ($MM) 3Q23 2Q23 3Q22 driven primarily by a higher income tax benefit and Total revenue, net of interest expense ($1,618) $149 ($819) lower litigation expense Provision (benefit) for credit losses (24) 136
Slide 24: Supplemental Business Segment Trends
Supplemental Business Segment Trends
Slide 25: Consumer Banking Trends
Consumer Banking Trends Business Leadership1 Total Revenue ($B) Total Expense ($B) and Efficiency (A) • No. 1 in estimated U.S. Retail Deposits $12.0 $6.0 70% • No. 1 Online Banking and Mobile Banking $10.8 $10.7 $10.5 $10.5 $5.5 $5.5 $5.3 $9.9 $5.1 $5.1 Functionality(B) 2.3 2.1 2.1 2.1 • No. 1 Smal
Slide 26: Consumer Digital Update
Consumer1 Digital Update Digital Adoption Client Engagement Digital Users2 and Households3 Digital Channel Usage4,5 Digital Sales6 60 56 57 100% 3,500 3,244 1,500 2,000 1,855 100% 52 54 2,954 1,503 90% 3,000 1,250 50 46 2,635 1,500 1,367 75% 43 41 80% 2,500 2,259 1,000 1,074 39 40 1,000 50% 70% 2,00
Slide 27: Consumer Credit Update
Consumer Credit Update Consumer Credit Card1 Consumer Vehicle Lending3 New Accounts (K) New Originations ($B) 1,500 1,255 $10.0 1,187 1,137 1,096 1,062 $6.8 $7.0 $6.8 $6.8 $7.5 $5.9 1,000 $5.0 500 $2.5 0 $0.0 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 Key Stats 3Q22 2Q23 3Q23 Key Stats 3Q22 2
Slide 28: Global Wealth & Investment Management Trends
Global Wealth & Investment Management Trends Business Leadership1 Average Deposits ($B) Average Loans and Leases ($B) • No. 1 on Forbes’ Best-in-State Wealth Advisors (2023), Top Women Wealth Advisors (2023), Top Women $400 $250 $224 $225 $221 $219 $219 Wealth Advisors Best-in State (2023), Best-in-
Slide 29: Global Wealth & Investment Management Digital Update
Global Wealth & Investment Management Digital Update Digital Adoption1,2 Client Engagement Digital Households / Relationships Digital Channel Adoption1,3 eDelivery4 750 100% 100% 100% 716 76% 74% 76% 78% 72% 72% 72% 700 90% 75% 75% 68% 668 672 57% 60% 53% 645 50% 650 83% 80% 50% 50% 78% 80% 600 76%
Slide 30: Global Banking Trends
Global Banking Trends Business Leadership1 Average Deposits ($B) Average Loans and Leases ($B) • World’s Most Innovative Bank – 2023, Most Innovative Bank in North America(O) $600 $400 $384 $380 $381 $383 $376 13 13 13 13 12 • World’s Best Digital Bank, World’s Best Bank for $495 $503 $493 $498 $504
Slide 31: Global Banking Digital Update
Global Banking Digital Update Digital Adoption1 Client Engagement CashPro® and BA360 Adoption % CashPro® App Sign-ins (K) CashPro® App Payments 80% 900 200 $192 5.0 76% 813 74% 75% $166 4.0 150 70% 600 576 3.6 3.0 $101 412 100 3.0 2.0 60% 300 254 50 $44 1.8 1.0 0.9 50% 0 0 0.0 3Q21 3Q22 3Q23 3Q20 3Q
Slide 32: Global Markets Trends and Revenue Mix
Global Markets Trends and Revenue Mix Business Leadership1 2023 YTD Global Markets Revenue Mix 2023 YTD Total FICC S&T Revenue Mix 2 • World's Best Bank for Markets (P) (excl. net DVA) (excl. net DVA)2 • North America's Best Bank for Sustainable Finance(P) • Americas Derivatives House of the Year an
Slide 33: Additional Presentation Information
Additional Presentation Information
Slide 34: 2023 YTD Consumer Payment Spend of $3.1T is up 4% YoY
2023 YTD Consumer Payment Spend of $3.1T is up 4% YoY Payment Spend1 ($ Volume) and YoY % Growth Payment Spend1 ($ and Transaction Volume) Quarterly YoY % Growth $3.1T $ Volume Transaction # $3.0T 50% $2.7T $2.2T 25% 21% 4% 12% 0% 3% 4% 0% (25)% 2020 YTD 2021 YTD 2022 YTD 2023 YTD 3Q 4Q 1Q 2Q 3Q 4Q
Slide 35: Balance Sheet Transformation Highlights
Balance Sheet Transformation Highlights (EOP basis unless noted) Metric 4Q09 4Q19 3Q23 Transformation through Responsible Growth Total loans and leases1 $1,003B $983B $1,049B • Our loan portfolio is more balanced today and has less inherent risk % consumer 67% 47% 44% – Lower concentration in the co
Slide 36: Historical Consumer Net Charge-off Rates
Historical Consumer Net Charge-off Rates Consumer Net Charge-off Rate 7.5% Pre-crisis average Financial crisis average Pre-pandemic average Average since pandemic 1.3% 3.6% 0.8% 0.5% 5.0% 2.5% 0.7% 0.0% 1Q04 1Q08 4Q12 1Q20 3Q23 • Since the beginning of 2004, total Consumer net charge-off rate has av
Slide 37: Historical Commercial Net Charge-off Rates
Historical Commercial Net Charge-off Rates Commercial Net Charge-off Rate 4.00% Financial crisis average Pre-pandemic average Average since pandemic 1.28% 0.13% 0.13% 3.00% 2.00% 1.00% 0.09% 0.03% 0.00% 1Q07 1Q08 4Q12 1Q20 3Q23 Commercial excl. Small Business (SB) Total Commercial • Total Commercial
Slide 38: Commercial Real Estate Loans
Commercial Real Estate Loans Commercial Real Estate as a Percent of: Geographic Distribution ($B) $2.4 $2.0 3% $5.9 3% 21.2% $2.7 8% $16.0 Northeast 4% 22% California Southeast 12.4% $6.9 Southwest 9% Midwest ~$73B 6.9% 7.0% Midsouth $14.4 $9.4 20% Northwest 13% Other $13.5 Non-US Total Commercial l
Slide 39: Notes
Notes A Global Liquidity Sources (GLS) include cash and high-quality, liquid, unencumbered securities, inclusive of 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 other investment-grade securities, and
Slide 40: Business Leadership Sources
Business Leadership Sources (A) Estimated U.S. retail deposits based on June 30, 2023 FDIC deposit data. (B) Javelin 2023 Online and Mobile Banking Scorecards. (C) FDIC, 2Q23. (D) Global Finance, March 2023. (E) Global Finance, August 2023. (F) Global Finance, December 2022. (G) J.D. Power 2023 Fina
Slide 41: Forward-Looking Statements
Forward-Looking Statements Bank of America Corporation (the Corporation) 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
Slide 42: Important Presentation Information
Important Presentation Information • The information contained herein is preliminary and based on Corporation 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 obligati
Slide 43: Bank of America
BANK OF AMERICA