Bank Of America Corporation · NYSE:BAC
Bank Of America — Q2 2022 Earnings Presentation
37 slides from Bank Of America's earnings presentation, Jul 18, 2022
Slide 1: Bank of America 2Q22 Financial Results
Bank of America 2Q22 Financial Results July 18, 2022
Slide 2: 2Q22 Financial Results: Summary Income Statement
2Q22 Financial Results Summary Income Statement 2Q22 1Q22 Inc / (Dec) 2Q21 Inc / (Dec) ($B, except per share data) Total Revenue, net of interest expense $22.7 $23.2 ($0.5) (2) % $21.5 $1.2 6 % Provision (benefit) for credit losses 0.5 — 0.5 N/M (1.6) 2.1 N/M Net charge-offs 0.6 0.4 0.2 46 0.6 — (4)
Slide 3: 2Q22 Highlights
2Q22 Highlights (Comparison to 2Q21, unless otherwise noted) • Net income of $6.2B; diluted earnings per share of $0.73; ROE1 9.9%, ROTCE1,2 14.1% • Revenue, net of interest expense, of $22.7B increased $1.2B, or 6% – Net interest income (NII) of $12.4B ($12.5B FTE2) increased $2.2B, or 22%, driven
Slide 4: Consumer Spend Remained Strong; 2022 YTD up 13% YoY to $2.1T
Consumer Spend Remained Strong; 2022 YTD up 13% YoY to $2.1T Payment Spend1 ($ volume) and YoY % Growth 2022 YTD Credit and Debit Spend2,3 ($ volume) Growth $2.1T vs. 2019 YTD vs. 2021 YTD $1.8T 75% $1.5T $1.5T 51% 50% 41% 42% 25% 36% 32% 13% 27% 25% 22% 5% 13% 12% (2%) 4% 0% 2019 YTD 2020 YTD 2021
Slide 5: Credit Risk Transformation Reflects Responsible Growth
Credit Risk Transformation Reflects Responsible Growth (EOP) Loan Mix1 Consumer Loan Portfolio ($B)1 4Q09 2Q22 $750 $675 46 44 $500 161 $448 (48%) 57 33% 51 44% 154 $1,003B $1,031B (82%) 84 $250 27 56% 67% 257 228 $0 4Q09 2Q22 Residential mortgage Home equity Consumer credit card Commercial Consumer
Slide 6: Balance Sheet Transformation Highlights
Balance Sheet Transformation Highlights (EOP basis unless noted) Metric 4Q09 4Q19 2Q22 Transformation through Responsible Growth Total loans and leases1 $1,003B $983B $1,031B • Our loan portfolio is more balanced today and has less inherent risk % consumer 67% 47% 44% – Lower concentration in the co
Slide 7: Balance Sheet, Liquidity and Capital
Balance Sheet, Liquidity and Capital (EOP basis unless noted) Balance Sheet Metrics 2Q22 1Q22 2Q21 Basel 3 Capital ($B)4 2Q22 1Q22 2Q21 Assets ($B) Common equity tier 1 capital $172 $170 $179 Total assets $3,112 $3,238 $3,030 Standardized approach Total loans and leases 1,031 993 919 Risk-weighted a
Slide 8: CET1 Ratio Drivers
CET1 Ratio1 Drivers Total payout ratio:2 45% +36 bps (6 bps) (10 bps) (11 bps) $1.0B $1.7B (1 bp) +3 bps $1.8B $1.1B $0.5B 10.5% 10.4% $5.9B 1Q22 Net income Share Common OCI on AFS Risk-weighted Other 2Q22 applicable to repurchases3 dividends debt securities assets common shareholders Note: Amounts
Slide 9: Average Loan and Lease Trends
Average Loan and Lease Trends1 Total Loans and Leases ($B) Total Loans and Leases in All Other ($B) $1,250 $25 YoY $978 $1,015 +12% $19 $1,000 $908 $921 $945 $20 $18 $16 $15 YoY 4 $14 (25%) $750 $15 4 3 3 3 $500 $10 15 14 13 12 12 $250 $5 $0 $0 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Ex. $
Slide 10: Average Deposit Trends
Average Deposit Trends Bank of America Ranked #1 in U.S. Retail Deposit Market Share1 Total Corporation ($B) Consumer Banking ($B) $2,500 $1,250 YoY YoY $1,027 $1,056 $1,078 $1,943 $2,017 $2,046 $2,012 +7% $979 $1,001 +10% $2,000 $1,889 $1,000 344 352 363 806 799 790 +8% 323 333 $1,500 729 764 $750
Slide 11: Net Interest Income Increased $2.2B, or 22% YoY
Net Interest Income Increased $2.2B, or 22% YoY Net Interest Income (FTE, $B)1 • Net interest income of $12.4B ($12.5B FTE1) $15.0 – Increased $872MM from 1Q22, driven by $12.5 lower premium amortization expense, higher $11.2 $11.5 $11.7 interest rates and higher loan balances $10.3 $10.0 ▪ Premium
Slide 12: Expense and Efficiency
Expense and Efficiency Total Noninterest Expense ($B) $20.0 $15.0 $14.4 $14.7 $15.3 $15.3 $15.0 6.4 5.7 5.7 5.8 6.4 $10.0 $5.0 8.7 8.7 9.0 9.5 8.9 $0.0 2Q21 3Q21 4Q21 1Q22 2Q22 Compensation and benefits Other Efficiency Ratio 80% 70% 70% 67% 66% 67% 63% 60% 50% 2Q21 3Q21 4Q21 1Q22 2Q22 • Noninterest
Slide 13: Asset Quality
Asset Quality Net Charge-offs ($MM)1 • Total net charge-offs of $571MM1 increased $179MM from 1Q22 $800 0.50% – Consumer net charge-offs of $525MM increased $185MM and included $85MM for non-core $595 $571 0.40% mortgage sales $600 $463 0.30% – Commercial net charge-offs of $46MM $362 $392 remained
Slide 14: Asset Quality – Consumer and Commercial Portfolios
Asset Quality – Consumer and Commercial Portfolios Consumer Net Charge-offs ($MM) Consumer Metrics ($MM) 2Q22 1Q22 2Q21 Provision $410 $14 ($707) $600 1.00% $513 $525 Nonperforming loans and leases 2,866 3,104 3,044 $450 0.75% % of loans and leases1 0.64 % 0.71 % 0.73 % $340 Consumer 30+ days perfor
Slide 15: Consumer Banking
Consumer Banking Inc / (Dec) • Net income of $2.9B decreased 5% from 2Q21 as NII Summary Income Statement ($MM) 2Q22 1Q22 2Q21 improvement was more than offset by increased provision $9,136 expense due to a reserve release that benefited 2Q21 Total revenue, net of interest expense $323 $950 Provisio
Slide 16: Global Wealth & Investment Management
Global Wealth & Investment Management Inc / (Dec) • Net income of $1.2B increased 16% from 2Q21 Summary Income Statement ($MM) 2Q22 1Q22 2Q21 – Pretax, pre-provision income1 of $1.6B increased Total revenue, net of interest expense $5,433 ($43) $368 24% from 2Q21 Provision (benefit) for credit losse
Slide 17: Global Banking
Global Banking Inc / (Dec) • Net income of $1.5B decreased 38% from 2Q21, Summary Income Statement ($MM) 2Q22 1Q22 2Q21 primarily driven by provision expense of $157MM Total revenue, net of interest expense1 $5,006 ($188) ($84) versus a reserve release that benefited 2Q21 Provision (benefit) for cre
Slide 18: Global Markets
Global Markets1 Inc / (Dec) • Net income of $1.0B increased 12% from 2Q21 Summary Income Statement ($MM) 2Q22 1Q22 2Q21 – Excluding net DVA, net income of $0.9B Total revenue, net of interest expense2 $4,502 ($790) ($218) decreased 4%3 Net DVA 158 89 192 • Revenue of $4.5B decreased 5% from 2Q21; ex
Slide 19: All Other
All Other1 Inc/(Dec) • Net loss of $318MM, compared to net income of Summary Income Statement ($MM) 2Q22 1Q22 2Q21 $1.9B in 2Q21, driven by the absence of a $2.0B Total revenue, net of interest expense ($1,286) $155 $199 positive income tax adjustment related to the Provision (benefit) for credit lo
Slide 20: Supplemental Business Segment Trends
Supplemental Business Segment Trends
Slide 21: Consumer Banking Trends
Consumer Banking Trends Business Leadership1 Total Revenue ($B) Total Expense ($B) and Efficiency (A) • No. 1 in estimated U.S. Retail Deposits $10.0 $9.1 $6.0 80% • No. 1 Online Banking and Mobile Banking $8.8 $8.9 $8.8 Functionality(B) $8.2 $4.9 $4.9 $5.0 2.0 $4.6 $4.7 • No. 1 in customer satisfac
Slide 22: Record 55MM Verified and 43MM Active Digital Users in 2Q22
Record 55MM Verified and 43MM Active Digital Users1 in 2Q22 Digital Adoption Client Engagement Digital Users1 and Households2 Digital Channel Usage3,4 Digital Sales 60 100% 3,000 2,845 1,250 1,750 1,640 80% 55 52 53 2,567 1,500 1,368 70% 48 90% 50 2,500 2,346 1,000 1,250 60% 1,089 43 80% 39 41 1,961
Slide 23: Consumer Creditworthiness Remains Strong
Consumer Creditworthiness Remains Strong Consumer Credit Card Consumer Vehicle Lending New Accounts (000s)1 New Originations ($B) 1,500 $10.0 1,049 977 1,068 $7.1 $6.8 $6.8 $7.1 $7.1 931 940 $7.5 1,000 $5.0 500 $2.5 0 $0.0 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Key Stats 2Q21 1Q22 2Q22 Ke
Slide 24: Credit Card Days Past Due Trend
Credit Card Days Past Due Trend Credit Card 30+ Days Past Due ($MM) • Beginning in 4Q20, we saw early stage $2,500 delinquencies recede below pre-pandemic levels Delinquency Rate as expired deferrals worked through the $2,000 1.96% delinquency periods and payment rates increased, fueled by stimulus
Slide 25: Credit Card Dynamics Remain Healthy
Credit Card Dynamics Remain Healthy FICO <660 as a % of Total Balances Credit Card Utilization1 FICO <660 (LHS) Total portfolio (RHS) 14% 75% 25% 12% 70% 68% 12% 23% 65% 22% 10% 20% 58% 60% 9% 8% 18% 18% 55% 6% 50% 15% Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Dec- Mar- Jun- Sep- Dec- M
Slide 26: Global Wealth & Investment Management Trends
Global Wealth & Investment Management Trends Business Leadership1 Average Deposits ($B) Average Loans and Leases ($B)2 • No. 1 on Forbes’ Best-in-State Wealth Advisors (2022), Top Women Wealth Advisors (2022), Top $400 $385 $250 $361 $364 $219 Women Wealth Advisors Best-in State (2022), $333 $339 $2
Slide 27: Global Wealth & Investment Management Digital Update
Global Wealth & Investment Management Digital Update1 Advisor-led Client Interactions, Powered by Digital Digital Adoption GWIM2 82%, up from 80% Online Mobile 81% of Merrill households3 digitally active across the enterprise, up from 79% in 2Q21 86% of Private Bank4 relationships digitally active a
Slide 28: Global Banking Trends
Global Banking Trends Business Leadership1 Average Deposits ($B) Average Loans and Leases ($B)2 • Global Most Innovative Financial Institution – 2022(L) • World's Best Bank, North America’s Best Bank for Small to $600 $562 $400 $377 $534 $540 $359 Medium-sized Enterprises, and Best Bank in the US(M)
Slide 29: Global Banking Digital Update
Global Banking Digital Update Creating an innovative digital experience for our clients Digital Adoption 76% Online Mobile Connect API Digitally active clients across commercial, corporate, and business banking clients (CashPro® & BA360 platforms) 192 bps YoY1 Client Engagement 1.8MM ~64MM $537B Sig
Slide 30: Global Markets Trends and Revenue Mix
Global Markets Trends and Revenue Mix Business Leadership1 2022 YTD Global Markets Revenue Mix 2022 YTD Total FICC S&T Revenue Mix 2 • Global Derivatives House of the Year (S) (excl. net DVA) (excl. net DVA)2 • Clearing House of the Year(S) • Interest Rate Derivatives House of the Year(T) • Global L
Slide 31: Additional Presentation Information
Additional Presentation Information
Slide 32: Daily Loan and Lease Balance Trends ($B)
Daily Loan and Lease Balance Trends ($B) Total Loans and Leases ex. PPP1 Loans and Leases in Business Segments ex. PPP1 $1,100 $600 Commercial Consumer $1,050 $550 $1,000 $500 $950 $450 $900 $400 $850 $350 12/31/19 06/30/22 12/31/19 06/30/22 Credit Card2 Residential Mortgage2 $100 $230 $220 $90 $210
Slide 33: Notes
Notes A Reserve Build (or Release) is calculated by subtracting net charge-offs for the period from the provision for credit losses recognized in that period. The period-end allowance, or reserve, for credit losses reflects the beginning of the period allowance adjusted for net charge-offs recorded
Slide 34: Business Leadership Sources
Business Leadership Sources (A) Estimated U.S. retail deposits based on June 30, 2021 FDIC deposit data. (B) Keynova 2Q22 Online Banker Scorecard, Javelin 2021 Online and Mobile Banking Scorecards. (C) Bank of America received the highest score in the J.D. Power 2022 Merchant Services Satisfaction S
Slide 35: 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
Slide 36: 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 37: BANK OF AMERICA
BANK OF AMERICA