Bank Of America Corporation · NYSE:BAC
Bank Of America — Q4 2022 Earnings Presentation
42 slides from Bank Of America's earnings presentation, Jan 13, 2023
Slide 1: Bank of America 4Q22 Financial Results
Bank of America 4Q22 Financial Results January 13, 2023
Slide 2: 4Q22 Financial Results
4Q22 Financial Results Summary Income Statement 4Q22 3Q22 Inc / (Dec) 4Q21 Inc / (Dec) ($B, except per share data) Total Revenue, net of interest expense $24.5 $24.5 $— — % $22.1 $2.5 11 % Provision (benefit) for credit losses 1.1 0.9 0.2 22 (0.5) 1.6 N/M Net charge-offs 0.7 0.5 0.2 33 0.4 0.3 90 Re
Slide 3: 4Q22 Highlights
4Q22 Highlights (Comparisons to 4Q21, unless otherwise noted) • Net income of $7.1B; diluted earnings per share of $0.85; ROE1 11.2%, ROTCE1,2 15.8% • Revenue, net of interest expense, of $24.5B increased $2.5B, or 11% – Net interest income (NII) of $14.7B ($14.8B FTE2) increased $3.3B, or 29%, driv
Slide 4: 2022 Financial Results
2022 Financial Results Summary Income Statement 2022 2021 Inc / (Dec) ($B, except per share data) Total Revenue, net of interest expense $95.0 $89.1 $5.8 7 % Provision (benefit) for credit losses 2.5 (4.6) 7.1 N/M Net charge-offs 2.2 2.2 (0.1) (3) Reserve build (release)1 0.4 (6.8) 7.2 N/M Nonintere
Slide 5: Continued Organic Growth in 2022
Continued Organic Growth in 2022 Consumer Banking Global Wealth & Investment Management Added over 1 million net new checking accounts Added nearly 28,000 net new relationships Record 3.5 million consumer investment accounts and Added more than 800 wealth advisors in 2H221 $28 billion net client flo
Slide 6: Continued Quarterly Operating Leverage Streak in 2022
Continued Quarterly Operating Leverage Streak in 2022 29% 3Q19-2Q21 Break in operating 22% leverage streak 21% 12% 8% 8% 8% 7% 7% 6% 6% 6% 5% 5% 4% 4% 4% 4% 4% 3% 3% 2% 3% 2% 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 15 15 15 15 16 16 16 16 17 17
Slide 7: Average Deposit Trends
Average Deposit Trends Bank of America Ranked #1 in U.S. Retail Deposit Market Share1 Total Corporation ($B) Consumer Banking ($B) $2,500 $1,250 $1,078 $1,069 QoQ $2,046 $1,027 $1,056 $1,047 $2,017 $2,012 $1,963 $1,926 QoQ (2%) $2,000 (2%) $1,000 344 352 363 359 352 806 799 790 738 681 (8%) $1,500 $
Slide 8: 2022 Weekly Deposit Trends
2022 Weekly Deposit Trends Total Deposits of $1,930B Declined $8B in 4Q Consumer Banking Declined $24B to $1,049B $2,250 5.00% $575 $1,938 $2,000 +50 bps 4.00% +75 bps $1,930 $555 $1,750 $550 $543 $1,500 +75 bps 3.00% $1,269 $1,219 +75 bps $1,250 2.00% $525 $518 $1,000 +75 bps $719 $661 1.00% $506 $
Slide 9: Asset Quality
Asset Quality Net Charge-offs ($MM)1 • Total net charge-offs of $689MM1 increased $169MM from 3Q22 $800 0.50% $689 – Consumer net charge-offs of $531MM 0.40% increased $72MM, primarily driven by higher $600 $571 $520 credit card losses 0.30% – Commercial net charge-offs of $158MM $362 $392 $400 incr
Slide 10: Historical Commercial Net Charge-off Rates
Historical Commercial Net Charge-off Rates Commercial Net Charge-off Rate 4.00% Financial crisis average Pre-pandemic average 1.28% 0.13% 3.00% 2.00% 1.00% 0.11% 0.08% 0.00% 1Q07 1Q08 4Q12 1Q20 4Q22 Commercial excl. Small Business (SB) Total Commercial • Total Commercial annualized net charge-off (N
Slide 11: Historical Consumer Net Charge-off Rates
Historical Consumer Net Charge-off Rates Consumer Net Charge-off Rate 7.5% Pre-crisis average Financial crisis average Pre-pandemic average 1.3% 3.6% 0.8% 5.0% 2.5% 0.5% 0.0% 1Q04 1Q08 4Q12 1Q20 4Q22 • Since the beginning of 2004, total Consumer net charge-off rate has averaged 1.6% • During the fin
Slide 12: Historical U.S. Credit Card Net Charge-off Rates
Historical U.S. Credit Card Net Charge-off Rates U.S. Credit Card Net Charge-off Rate 20.0% Pre-crisis average Financial crisis average Pre-pandemic average 5.2% 8.3% 3.0% 15.0% 10.0% 5.0% 1.7% 0.0% 1Q04 1Q08 4Q12 1Q20 4Q22 • Since the beginning of 2004, U.S. Credit Card net charge-off rate has aver
Slide 13: Balance Sheet, Liquidity and Capital
Balance Sheet, Liquidity and Capital (EOP1 basis unless noted) Balance Sheet Metrics 4Q22 3Q22 4Q21 Basel 3 Capital ($B)5 4Q22 3Q22 4Q21 Assets ($B) Common equity tier 1 capital $180 $176 $172 Total assets $3,051 $3,073 $3,169 Standardized approach Total loans and leases 1,046 1,032 979 Risk-weighte
Slide 14: CET1 Ratio Drivers
CET1 Ratio1,2 Drivers +43 bps (11 bps) (6 bps) +2 bps (3 bps) $1.8B $1.0B $0.4B $4.4B 11.2% 11.0% $6.9B 3Q22 Net income Common dividends Share repurchases3 OCI on AFS Risk-weighted 4Q22 applicable to debt securities assets common shareholders Note: Amounts may not total due to rounding. Dollar value
Slide 15: Average Loan and Lease Trends
Average Loan and Lease Trends Total Loans and Leases ($B)1 Total Loans and Leases in All Other ($B) $1,250 $20 YoY $16 $1,015 $1,034 $1,039 +10% $15 $945 $978 $14 $1,000 $15 3 3 YoY 3 $11 $10 $750 (36%) $10 3 2 $500 13 12 12 $5 $250 8 8 $0 $0 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 Ex. $93
Slide 16: Net Interest Income Increased $3.3B, or 29% YoY
Net Interest Income Increased $3.3B, or 29% YoY Net Interest Income (FTE, $B)1 • Net interest income of $14.7B ($14.8B FTE1) increased $3.3B YoY, $14.8 and $0.9B from 3Q22, driven by benefits from higher interest $15.0 $13.9 rates, including lower premium amortization expense, as well as $12.5 loan
Slide 17: Expense and Efficiency
Expense and Efficiency Total Noninterest Expense ($B) $20.0 $14.7 $15.3 $15.3 $15.3 $15.5 5.7 5.8 6.4 6.4 6.4 $10.0 9.0 9.5 8.9 8.9 9.2 $0.0 4Q21 1Q22 2Q221 3Q221 4Q22 Compensation and benefits Other Efficiency Ratio 70% 67% 67% 66% 62% 63% 60% 50% 4Q21 1Q22 2Q22 3Q22 4Q22 • Noninterest expense of $
Slide 18: Asset Quality – Consumer and Commercial Portfolios
Asset Quality – Consumer and Commercial Portfolios Consumer Net Charge-offs ($MM) Consumer Metrics ($MM) 4Q22 3Q22 4Q21 Provision $902 $722 $149 $600 1.00% $525 $531 Nonperforming loans and leases 2,754 2,760 2,989 $459 % of loans and leases1 0.60 % 0.61 % 0.69 % $450 0.75% $340 Consumer 30+ days pe
Slide 19: Consumer Banking
Consumer Banking Inc / (Dec) • Record net income of $3.6B increased 15% from 4Q21, as Summary Income Statement ($MM) 4Q22 3Q22 4Q21 revenue improvement was partially offset by higher provision for credit losses and business investments Total revenue, net of interest expense $10,782 $878 $1,870 Provi
Slide 20: Global Wealth & Investment Management
Global Wealth & Investment Management Inc / (Dec) • Net income of $1.2B decreased 2% from 4Q21 Summary Income Statement ($MM) 4Q22 3Q22 4Q21 – Pretax, pre-provision income1 of $1.6B increased Total revenue, net of interest expense $5,410 ($19) $8 4% from 4Q21 Provision (benefit) for credit losses 37
Slide 21: Global Banking
Global Banking Inc / (Dec) • Net income of $2.5B decreased 5% from 4Q21 Summary Income Statement ($MM) 4Q22 3Q22 4Q21 – Pretax, pre-provision income2 of $3.6B increased Total revenue, net of interest expense1 $6,438 $847 $531 13% from 4Q21 Provision (benefit) for credit losses 149 (21) 612 • Revenue
Slide 22: Global Markets
Global Markets1 Inc / (Dec) • Net income of $0.5B decreased 25% from 4Q21 Summary Income Statement ($MM) 4Q22 3Q22 4Q21 – Excluding net DVA, net income of $0.7B Total revenue, net of interest expense2 $3,861 ($622) $43 decreased 3%3 Net DVA (193) (179) (195) • Revenue of $3.9B increased 1% from 4Q21
Slide 23: All Other
All Other1 Inc/(Dec) • Net loss of $689MM was relatively flat compared to Summary Income Statement ($MM) 4Q22 3Q22 4Q21 net loss of $673MM in 4Q21 Total revenue, net of interest expense ($1,836) ($1,037) $38 • Total corporate effective tax rate (ETR) for the Provision (benefit) for credit losses (42
Slide 24: Supplemental Business Segment Trends
Supplemental Business Segment Trends
Slide 25: Consumer Banking Trends
Consumer Banking Trends Business Leadership1 Total Revenue ($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 $9.9 $5.1 $5.1 Functionality(B) $9.1 $4.7 $4.9 $5.0 $8.9 $8.8 2.3 • No. 1 in customer satisfa
Slide 26: Consumer Digital Update
Consumer1 Digital Update Digital Adoption Client Engagement Digital Users2 and Households3 Digital Channel Usage4,5 Digital Sales6 60 56 100% 3,500 1,250 2,000 100% 52 54 3,046 50 1,579 90% 3,000 2,740 1,461 50 1,000 1,500 75% 44 41 80% 2,500 2,355 998 38 39 977 40 2,094 750 1,000 50% 809 70% 2,000
Slide 27: Consumer Banking Performance Since 2019
Consumer Banking Performance Since 2019 2022 vs. 2019 Ending Deposits +$318B Net New Consumer Checking Accounts +96% Consumer Checking Accounts 35.9MM; +10% Total Clients Enrolled in Preferred Rewards1 +43% New Credit Card Accounts2 +4% Combined Credit/Debit Card Spend3 +35% Consumer Investment Acco
Slide 28: Consumer Creditworthiness Remains Strong
Consumer Creditworthiness Remains Strong Consumer Credit Card1 Consumer Vehicle Lending3 New Accounts (000s) New Originations ($B) 1,500 1,255 $10.0 1,068 1,096 $6.8 $7.1 $7.1 $6.8 940 977 $7.5 $5.9 1,000 $5.0 500 $2.5 0 $0.0 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 Key Stats 4Q21 3Q22 4Q22
Slide 29: Global Wealth & Investment Management Trends
Global Wealth & Investment Management Trends Business Leadership1 Average Deposits ($B) Average Loans and Leases ($B)2 • No. 1 on Forbes’ Best-in-State Wealth Advisors (2022), Top Women Wealth Advisors (2022), Top Women $400 $385 $250 Wealth Advisors Best-in State (2022), and Top Next $361 $364 $219
Slide 30: Global Wealth & Investment Management Digital Update
Global Wealth & Investment Management Digital Update Digital Adoption1,2 Client Engagement Digital Households / Relationships Digital Channel Adoption1,3 eDelivery4 700 690 100% 100% 80% 75% 77% 674 649 70% 611 72% 72% 74% 90% 75% 67% 60% 600 57% 51% 54% 80% 50% 44% 82% 40% 500 79% 77% 70% 25% 72% 2
Slide 31: Global Banking Trends
Global Banking Trends Business Leadership1 Average Deposits ($B) Average Loans and Leases ($B)2 • Global Most Innovative Financial Institution – 2022(M) • World's Best Bank, North America’s Best Bank for $600 $562 $400 $384 $380 $540 $377 13 $509 $503 $359 13 13 Small to Medium-sized Enterprises, an
Slide 32: Global Banking Digital Update
Global Banking Digital Update Digital Adoption1 Client Engagement Client Digital Adoption CashPro® Sign-ins CashPro® App Payments 100% 3,000 200 $186 4.0 2,599 75% 75% 75% 2,026 679 150 $133 3.0 2,000 3.2 454 50% 2.6 100 2.0 1,000 1,920 $48 $54 25% 1,572 50 1.0 1.0 0.8 0% 0 0 0.0 4Q21 4Q22 4Q21 4Q22
Slide 33: Global Markets Trends and Revenue Mix
Global Markets Trends and Revenue Mix Business Leadership1 2022 Global Markets Revenue Mix 2022 Total FICC S&T3 Revenue Mix • Americas Derivatives House of the Year and (excl. net DVA)2 (excl. net DVA)2 Americas House of the Year for Equity Derivatives, FX Derivatives, Interest Rate Derivatives, and
Slide 34: Additional Presentation Information
Additional Presentation Information
Slide 35: Consumer Spend Remained Strong; 2022 up 10% YoY to $4.2T
Consumer Spend Remained Strong; 2022 up 10% YoY to $4.2T Payment Spend1 ($ Volume) and YoY % Growth Payment Spend1 ($ and Transaction Volume) Quarterly YoY % Growth $4.2T $ Volume Transaction # $3.8T 50% $3.0T $3.1T 21% 25% 14% 5% 9% 4% 10% 0% 6% 2% (25)% 2019 2020 2021 2022 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Slide 36: Credit Risk Transformation Reflects Responsible Growth Strategy
Credit Risk Transformation Reflects Responsible Growth Strategy (EOP) Loan Mix1 Consumer Loan Portfolio ($B)1 4Q09 4Q22 $750 $675 46 44 $500 161 $456 (42%) 53 33% 52 44% 154 (83%) 93 $1,003B $1,046B $250 27 56% 67% 257 230 $0 4Q09 4Q22 Residential mortgage Home equity Consumer credit card Commercial
Slide 37: Balance Sheet Transformation Highlights
Balance Sheet Transformation Highlights (EOP basis unless noted) Metric 4Q09 4Q19 4Q22 Transformation through Responsible Growth Total loans and leases1 $1,003B $983B $1,046B • Our loan portfolio is more balanced today and has less inherent risk % consumer 67% 47% 44% – Lower concentration in the co
Slide 38: 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 39: Business Leadership Sources
Business Leadership Sources (A) Estimated U.S. retail deposits based on June 30, 2022 FDIC deposit data. (B) Javelin 2022 Online and Mobile Banking Scorecards. (C) Bank of America received the highest score in the J.D. Power 2022 Merchant Services Satisfaction Study of customers’ satisfaction with c
Slide 40: 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 41: 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 42: Bank of America
BANK OF AMERICA