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) — Q2 2018 Earnings Presentation
28 slides from Bank Of America's earnings presentation, Jul 16, 2018
Slide 1: Bank of America 2Q18 Financial Results
Bank of America 2Q18 Financial Results July 16, 2018
Slide 2: Second Quarter 2018 Highlights
Second Quarter 2018 Highlights (Comparisons to 2Q17) Earnings 1 Returns and Efficiency • Net income of $6.8B, up 33% • Return on average assets of 1.17% improved 27 bps • Diluted earnings per share of $0.63, up 43% • Return on average common shareholders’ equity of 10.8% increased 300 bps • Total re
Slide 3: Operating Leverage Trend
Operating Leverage Trend Positive Operating Leverage for 14 Consecutive Quarters 1 +22% +21% +29% +3% +8% +3% +5% +6% +8% +6% +3% +8% 2 +5% +4% Reported revenue growth of 2% and operating leverage of 3% 7% 7% 7% 2 4% 3% 2% 2% 1% 1% 1% (1%) (1%) (1%) (2%) (2%) (1%) (1%) (2%) (3%) (2%) (4%) (5%) (5%)
Slide 4: Consumer Banking Digital Usage Trends
Consumer Banking Digital Usage Trends 1 Active Digital Banking Users (MM) Erica Users (MM) Users (MM) 40 2x 4.0 34.0 35.7 34x 2.0 30.8 32.2 30 25.3 22.9 2.0 20 20.2 17.6 0.05 10 0 2Q15 2Q16 2Q17 2Q18 April '18 July June '17 July Digital banking users Launch 2018 Launch 2018 Mobile banking users Mobi
Slide 5: Digital Capabilities Enabling Convenience and Increased Activity
Digital Capabilities Enabling Convenience and Increased Activity Digital Payments Digital Sales Digital Investments Person-to-Person Payments (Zelle) 1 Weekly Auto Loan Volume ($MM) Merrill Edge Brokerage Assets 40 $20 200 $191 4 35.1 1.3x $25.6 $159 30 $19.7 $132 3 $122 2.3 2.5 20 $10 $10 100 2.1 2
Slide 6: Financial Results Summary
Financial Results Summary Income Statement ($B, except per share data) 2Q18 2Q17 % Inc / (Dec) Excl. 2Q17 Selected Items 1 Total revenue, net of interest expense $22.6 $22.8 (1) % Revenue +3% Noninterest expense 13.3 14.0 (5) Expense (3%) Provision for credit losses 0.8 0.7 14 Pretax income 8.5 8.1
Slide 7: Balance Sheet, Liquidity and Capital
Balance Sheet, Liquidity and Capital 3 Balance Sheet ($B, EOP balances) 2Q18 1Q18 2Q17 Basel 3 Capital ($B) 2Q18 1Q18 2Q17 Total assets $2,291.7 $2,328.5 $2,254.7 Common equity tier 1 capital (CET1) $164.9 $164.8 $168.7 Total loans and leases 935.8 934.1 916.7 Standardized approach Total loans and l
Slide 8: Average Loans and Leases
Average Loans and Leases Total Loans and Leases ($B) 1 Total Loans and Leases in All Other ($B) 1 YoY YoY +2% (28%) $1,000 $915 $918 $928 $932 $935 $150 $800 $100 $88 $600 $77 $71 6 $68 $63 16 15 $400 14 13 $50 12 65 $200 62 58 55 51 $0 $0 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 Residentia
Slide 9: Asset Quality
Asset Quality Net Charge-offs ($MM) 1 • Total net charge-offs of $1.0B increased $0.1B from 1Q18; net $1,400 $1,237 1.0% charge-off ratio increased 3 bps to 0.43% $996 $908 $900 $911 – Consumer net charge-offs were flat at $0.8B . Reflected seasonally higher losses in credit card, offset $700 0.53%
Slide 10: Asset Quality – Consumer and Commercial Portfolios
Asset Quality – Consumer and Commercial Portfolios Consumer Net Charge-offs ($MM) Consumer Metrics ($MM) 2Q18 1Q18 2Q17 $1,000 2.0% Provision $757 $748 $606 $830 $830 $751 $731 $769 Nonperforming loans and leases 4,639 4,906 5,282 $750 1.5% % of loans and leases 1 1.03 % 1.10 % 1.18 % $500 1.0% Cons
Slide 11: Net Interest Income
Net Interest Income Net Interest Income (FTE, $B) 1 1 $14 • Net interest income of $11.7B ($11.8B FTE ) $11.7 $11.8 $11.8 $11.2 $11.4 – Increased $0.7B from 2Q17, which reflected the benefits from higher interest rates and loan and deposit growth, partially offset by a decline resulting from the sal
Slide 12: Expense and Efficiency
Expense and Efficiency Total Noninterest Expense ($B) • Total noninterest expense of $13.3B declined $0.7B, or 5%, from $16 $14.0 $13.4 $13.3 $13.9 $13.3 2Q17, due to the absence of a $0.3B impairment charge in 2Q17 related to certain data centers, as well as reduced support costs $12 5.4 and lower
Slide 13: Consumer Banking
Consumer Banking Inc / (Dec) • Net income of $2.9B increased 42% from 2Q17; ROAAC of 31% 1 Summary Income Statement ($MM) 2Q18 1Q18 2Q17 – 9% operating leverage (18th consecutive quarter of positive Total revenue, net of interest expense $9,211 $179 $702 operating leverage) Provision for credit loss
Slide 14: Consumer Banking Trends
Consumer Banking Trends Business Leadership 1 Total Revenue ($B) 2 Total Expense ($B) and Efficiency 2 • #1 Consumer Deposit Market Share A $10 $9.0 $9.2 $5 $4.5 $4.5 $4.5 70% • 2018 JD Power Certified Mobile App $8.5 $8.8 $9.0 $4.4 $4.4 • Named North America's Best Digital Bank B $8 2.5 2.6 $4 2.5
Slide 15: Global Wealth & Investment Management
Global Wealth & Investment Management Inc / (Dec) Summary Income Statement ($MM) 1 2Q18 1Q18 2Q17 Net income of $1.0B increased 20% from 2Q17; ROAAC of 27% Total revenue, net of interest expense $4,709 ($147) $14 • Provision for credit losses 12 (26) 1 – Strong pretax margin of 28%, stable to 2Q17 N
Slide 16: Global Wealth & Investment Management Trends
Global Wealth & Investment Management Trends Business Leadership 1 Average Deposits ($B) Average Loans and Leases ($B) • #1 U.S. wealth management market position $300 I $180 $159 $161 across client assets, deposits and loans $245 $240 $240 $243 $236 $151 $154 $157 $250 3 3 3 • #1 in personal trust
Slide 17: Global Banking
Global Banking Inc/(Dec) Summary Income Statement ($MM) 1 2Q18 1Q18 2Q17 Total revenue, net of interest expense 2 $4,922 ($12) ($117) • Net income of $2.1B increased 16% from 2Q17; ROAAC of 20% Provision (benefit) for credit losses (23) (39) (38) • Revenue of $4.9B decreased 2% from 2Q17 Noninterest
Slide 18: Global Banking Trends
Global Banking Trends Business Leadership 1 Average Deposits ($B) Average Loans and Leases ($B) • World’s Best Bank for Advisory and North $400 America’s Best Bank for Small to Medium-sized $400 $345 $346 $350 $352 $355 K $330 $324 $323 Enterprises $300 $316 18 18 17 17 17 • Most Innovative Investme
Slide 19: Global Markets
Global Markets Inc/(Dec) Summary Income Statement ($MM) 1 2Q18 1Q18 2Q17 2 Net income of $1.1B increased 34% from 2Q17; ROAAC of 13% Total revenue, net of interest expense $4,221 ($565) $274 • [ Bullets to come ] Net DVA (179) (243) (20) – Excluding net DVA, net income of $1.3B increased 35% 2, 3 To
Slide 20: Global Markets Trends and Revenue Mix
Global Markets Trends and Revenue Mix Business Leadership 1 YTD Global Markets Revenue Mix YTD Total FICC S&T Revenue Mix (excl. net DVA) 2 (excl. net DVA) 2 • Best Bank for Markets in Asia K • European Trading House of the Year O • Equity Derivatives House of the Year P • #1 Equity Portfolio Tradin
Slide 21: All Other
All Other 1 Inc/(Dec) Summary Income Statement ($MM) 2 2Q18 1Q18 2Q17 • Net loss of $0.2B improved $0.1B from 2Q17 Total revenue, net of interest expense ($300) $33 ($1,176) • Revenue declined $1.2B from 2Q17 Provision (benefit) for credit losses (105) 47 54 Noninterest expense 619 (357) (756) – 2Q1
Slide 22: Second Quarter 2018 Key Takeaways
Second Quarter 2018 Key Takeaways • Produced solid returns • Delivered responsible growth • Solid client activity drove good deposit, loan and AUM growth • Positive operating leverage for 14 consecutive quarters • Asset quality remained strong • Increased capital returned to shareholders; repurchase
Slide 23: Appendix
Appendix
Slide 24: 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
Slide 25: Sources
Sources A Estimated retail consumer deposits based on June 30, 2017 FDIC deposit data. B Euromoney, 2018. C Dynatrace 2Q18 Online Banker Scorecard and Javelin 2017 Mobile Banking Scorecard. D Forrester 2017 U.S. Credit Card Sales Functionality Benchmark. E Kiplinger’s 2017 Best of the Online Brokers
Slide 26: 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
Slide 27: 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
Slide 28: Bank of America
Bank of America BANK OF AMERICA ERRILL LYNCH