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) — Q4 2018 Earnings Presentation

32 slides from Bank Of America's earnings presentation, Jan 16, 2019

  1. Slide 1: Bank of America 4Q18 Financial Results

    Bank of America 4Q18 Financial Results January 16, 2019

  2. Slide 2: 2018 Financial Results

    2018 Financial Results 2018 Reported vs. Reported 2018 vs. 2017 Excl. Tax Act Summary Income Statement 2017 Excl. Tax Act ($B, except per share data) 2018 2017 % Inc / (Dec) 2017 1,2 % Inc / (Dec) Total revenue, net of interest expense $91.2 $87.4 4 % $88.3 3 % 6% operating Noninterest expense 53.4

  3. Slide 3: Full Year Business Results

    Full Year Business Results 1 Net Income (Loss) ($B) Consumer Banking GWIM Global Banking Global Markets All Other 2 $12.0 $8.2 $8.2 $7.2 $7.0 $5.7 $4.1 $3.8 $4.0 $3.3 $2.8 $3.1 ($0.4) ($0.1) ($1.7) 2016 2017 2018 FY 2018 Consumer Banking GWIM Global Banking Global Markets ROAAC 3 33% 28% 20% 11% Eff

  4. Slide 4: Significantly Reduced Expenses While Investing in the Franchise

    Significantly Reduced Expenses While Investing in the Franchise $83.1 $80.3 $75.7 $72.1 $69.2 87.1% 88.1% 85.5% $57.6 $55.1 79.1% $54.7 $53.4 75.4% 69.4% 65.8% 62.7% 58.5% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Noninterest Expense ($B) Efficiency Ratio (%) 4

  5. Slide 5: Delivered Positive Operating Leverage for Consecutive Quarters

    Delivered Positive Operating Leverage for 16 Consecutive Quarters Operating Leverage Trend 1 +22% +21% +29% +3% +8% +3% +5% +6% +8% +6% +3% +8% 2 +5% +4% +7% +7% 2 Reported revenue Reported revenue growth of 2% and growth of 11% and operating leverage operating leverage of 3% of 12% 7% 7% 7% 6% 4% 4

  6. Slide 6: Growth in NII Driven by Rates as well as Client Activity

    Growth in NII Driven by Rates as well as Client Activity Quarterly Net Interest Income ($B) Total Average Deposits ($B) CAGR $12.5 +4% FY18 $1,400 $47.4B $1,315 $1,270 $12.0 $1,223 $1,200 $1,156 FY17 $44.7B $11.5 $1,000 2015 2016 2017 2018 $11.0 Average Loans and Leases in Business Segments ($B) 1 $

  7. Slide 7: Increased Capital Returned to Shareholders

    Increased Capital Returned to Shareholders Average Diluted Shares Outstanding (B) Common Dividends and Share Repurchases ($B) $25.5 11.4 11.3 11.2 11.0 $16.8 10.6 $20.1 10.0 $12.8 $7.7 $4.5 $3.6 $5.1 $2.9 $2.4 $5.4 $3.2 $1.7 $4.0 $2.1 $2.6 $0.4 $1.3 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 2013 2014 2015 2016

  8. Slide 8: 4Q18 Financial Results

    4Q18 Financial Results 4Q18 Reported vs. Reported 4Q18 vs. 4Q17 Excl. Tax Act Summary Income Statement 4Q17 Excl. Tax Act ($B, except per share data) 4Q18 4Q17 % Inc / (Dec) 4Q17 1,2 % Inc / (Dec) Total revenue, net of interest expense $22.7 $20.4 11 % $21.4 6 % 7% operating 2,4 Noninterest expense

  9. Slide 9: Fourth Quarter 2018 Highlights

    Fourth Quarter 2018 Highlights (% comparisons are to 4Q17 adjusted for enactment of Tax Act) Earnings Returns and Efficiency • Diluted earnings per share of $0.70, up 49% 1 • Return on average assets of 1.24% improved 34 bps 1 • Record net income of $7.3B, up 39% 1 • Return on average common shareho

  10. Slide 10: Balance Sheet, Liquidity and Capital

    Balance Sheet, Liquidity and Capital (EOP basis unless noted) 3 Balance Sheet ($B) 4Q18 3Q18 4Q17 Basel 3 Capital ($B) 4Q18 3Q18 4Q17 Total assets $2,354.5 $2,338.8 $2,281.2 Common equity tier 1 capital (CET1) $167.3 $164.4 $168.5 Total loans and leases 946.9 929.8 936.7 Standardized approach Total

  11. Slide 11: Average Deposits

    Average Deposits Bank of America Ranked #1 in U.S. Deposit Market Share 1 Total Corporation ($B) Consumer Banking ($B) YoY YoY $1,500 $1,294 $1,345 +4% $800 +3% $1,186 $1,251 $666 $687 $618 422 (5%) $564 442 $600 183 194 +6% $1,000 438 450 169 155 $400 154 165 +7% 122 140 $500 923 +8% 748 801 852 $2

  12. Slide 12: Average Loans and Leases

    Average Loans and Leases Total Loans and Leases ($B) Total Loans and Leases in All Other ($B) YoY YoY $928 $932 $935 $931 $935 +1% 2018 includes $10B in sales, (25%) $1,000 $100 primarily non-core consumer real estate loans $800 $71 $68 $75 $63 $60 $600 14 13 $53 12 12 $50 10 $400 $25 58 55 51 $200

  13. Slide 13: Net Interest Income

    Net Interest Income Net Interest Income (FTE, $B) 1 1 $15 • Net interest income of $12.3B ($12.5B FTE ) $12.5 $11.7 $11.8 $11.8 $12.0 – Increased $0.8B from 4Q17, reflecting the benefits from higher interest rates as well as loan and deposit growth, $10 modestly offset by loan spread compression and

  14. Slide 14: Expense and Efficiency

    Expense and Efficiency Total Noninterest Expense ($B) • Total noninterest expense of $13.1B declined $0.1B, or 1%, from $16 $13.3 $13.9 $13.3 $13.1 $13.1 4Q17, as efficiency savings offset investments and inflationary costs $12 5.4 5.7 5.3 5.3 5.4 – Noninterest expense flat versus 3Q18, as impact of

  15. Slide 15: Asset Quality

    Asset Quality Net Charge-offs ($MM) 1 $1,500 1.0% • Total net charge-offs of $0.9B were stable from 3Q18 $1,237 – Consumer and Commercial net charge-offs of $0.8B and $996 $1,000 $911 $932 $924 $0.1B were relatively flat from 3Q18 0.53% 0.5% • Net charge-off ratio of 39 bps decreased 1 bp from 3Q18

  16. Slide 16: Asset Quality – Consumer and Commercial Portfolios

    Asset Quality – Consumer and Commercial Portfolios Consumer Net Charge-offs ($MM) Consumer Metrics ($MM) 4Q18 3Q18 4Q17 $1,000 2.0% Provision $734 $710 $619 $830 $830 $769 $776 $804 Nonperforming loans and leases 3,842 4,306 5,166 $750 1.5% % of loans and leases 1 0.86 % 0.97 % 1.14 % $500 1.0% Cons

  17. Slide 17: Consumer Banking

    Consumer Banking • Net income of $3.3B increased 52% from 4Q17; ROAAC of 36% Inc / (Dec) – 11% operating leverage and steady credit costs drove results Summary Income Statement ($MM) 1 4Q18 3Q18 4Q17 Total revenue, net of interest expense $9,877 $474 $922 • Revenue of $9.9B increased $0.9B, or 10%,

  18. Slide 18: Consumer Banking Trends

    Consumer Banking Trends Business Leadership 1 Total Revenue ($B) Total Expense ($B) and Efficiency • #1 Consumer Deposit Market Share A $9.9 $9.4 • 2018 and 2019 J.D. Power Certified Mobile App $10 $9.0 $9.0 $9.2 $5 $4.5 $4.5 $4.4 $4.4 $4.5 70% • 2019 J.D. Power Certified Website 2.7 $8 2.6 2.5 $4 B

  19. Slide 19: 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 4.8MM Erica users since launch in April 2018 $800 $721 +6% 60 $60 $673 51.6 40 36.3 $604 $618 50 32.9 34.9 31.0 $600 +1% 4.9MM users, up 329 40 $40 30 324 2.4x since

  20. Slide 20: Global Wealth & Investment Management

    Global Wealth & Investment Management • Record net income of $1.1B increased 43% from 4Q17; ROAAC of Inc / (Dec) 29% 1 4Q18 3Q18 4Q17 Summary Income Statement ($MM) – Strong pretax margin of 29% Total revenue, net of interest expense $4,990 $207 $307 Provision for credit losses 23 10 17 • Revenue of

  21. Slide 21: 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 $161 $162 $164 across client assets, deposits and loans $240 $243 $238 $247 $157 $159 $250 $236 • #1 in personal trust assets

  22. Slide 22: Global Banking

    Global Banking Inc/(Dec) Summary Income Statement ($MM) 1 4Q18 3Q18 4Q17 • Net income of $2.1B increased 25% from 4Q17; ROAAC of 20% Total revenue, net of interest expense 2 $5,050 $312 $31 • Revenue of $5.1B increased 1% from 4Q17 Provision (benefit) for credit losses 85 155 (47) Reflected higher N

  23. Slide 23: 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 $400 Medium-sized Enterprises B $360 $400 $350 $352 $355 $353 $357 $330 $324 $323 $338 • Most Innovative Investment Bank of the Year 17 17 17 16 16 from North Amer

  24. Slide 24: Global Markets

    Global Markets Inc/(Dec) 1 • Net income of $0.5B increased 20% from 4Q17; ROAAC of 6% Summary Income Statement ($MM) 4Q18 3Q18 4Q17 • [ Bullets to come ] Total revenue, net of interest expense 2 $3,213 ($630) ($183) – Excluding net DVA, net income of $0.5B decreased 6% Net DVA 52 151 170 • Revenue d

  25. Slide 25: Global Markets Trends and Revenue Mix

    Global Markets Trends and Revenue Mix Business Leadership 1 2018 Global Markets Revenue Mix 2018 Total FICC S&T Revenue Mix • #1 Equity Portfolio Trading Share – North (excl. net DVA) 2 (excl. net DVA) 2 American Institutions L • #1 for U.S. FICC Overall Trading Quality and #1 for U.S. FICC Overall

  26. Slide 26: All Other

    All Other 1 Inc/(Dec) • Net income of $0.3B improved $2.9B from 4Q17 2 4Q18 3Q18 4Q17 Summary Income Statement ($MM) – 4Q17 included charges of $2.9B from the enactment of the Total revenue, net of interest expense ($239) ($400) $1,127 Tax Act, comprised of $0.9B revenue impact (other income) Provis

  27. Slide 27: Appendix

    Appendix

  28. Slide 28: Notes

    Notes A Enactment of the Tax Act reduced 4Q17 and 2017 net income by $2.9B, or $0.27 per diluted common share, which included a $0.9B pretax charge in other noninterest income (which reduced pretax income and revenue, net of interest expense) predominantly related to the revaluation of certain tax-a

  29. Slide 29: Sources

    Sources A Estimated retail consumer deposits based on June 30, 2018 FDIC deposit data. B Euromoney, 2018. C Dynatrace 4Q18 Online Banker Scorecard, Javelin 2018 Online Banking Scorecard, Dynatrace 3Q18 Mobile Banking Scorecard, and Javelin 2018 Mobile Banking Scorecard. D Forrester 2018 Banking Sale

  30. Slide 30: 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

  31. Slide 31: 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

  32. Slide 32: Bank of America

    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) — Q4 2018 Earnings Presentation on 6ix