Bank of America Corporation Q3 FY2025 earnings call

Highlights - Bank of America delivered strong Q3 results with revenue of $28 billion (+11% y/y), EPS $1.06 (+31% y/y), ROTC 15.4%, efficiency ratio below 62%, return on assets 98 basis points. Returned $7.4 billion to shareholders. - Net interest income on an FTE basis reached a record $15.4 billion. Investment banking fees exceeded $2 billion (+43% y/y). Sales and trading grew revenue 8% for 14th consecutive quarter of y/y growth. Asset management fees up 12% y/y. - Consumer banking had $3.4B after-tax earnings up 28%, driven by strong revenue growth and disciplined expense management. Global wealth and management had net income up 19% due to strong advisor productivity and fee-based assets growth. - Expense discipline: 5% expense growth vs 11% revenue growth, with compensable revenue streams growing 15% y/y. Provision expense improved with net charge-offs declining 10%. - Balance sheet: Total assets $3.4 trillion, deposits up $71 billion, loans up 9% y/y, CET1 ratio 11.6% above regulatory minimum.

Consumer Banking: Delivered $3.4 billion in after-tax earnings, up 28% year over year, with 600 basis points of operating leverage. Global Wealth and Management: Posted net income of nearly $1.3 billion, up 19%, driven by strong advisor productivity, fee-based assets growth, and $12 billion loan growth. Opened 32,000 banking accounts and grew deposits $3 billion. Global Banking: Generated net income of $2.1 billion, up 12% year over year, supported by 500 basis points of operating leverage and a 43% year over year increase in firmwide investment banking fees. Global Markets: Generated net income of $1.6 billion, up modestly year over year. Excluding DVA, revenue grew 10% year over year, driven by strong sales and trading performance.

• NII expected in Q4 2025 to be in the range of $15.5 to $15.7 billion, with potential acceleration in H2 2025. Full year 2026 NII expected to grow 5-7% driven by core loan and deposit growth, fixed rate asset repricing. - Expenses expected to remain roughly in line with Q3 in Q4, with headcount managed closely.

Uncertainties around tariffs, interest rates, and regulatory changes that could impact actual results. Credit risks if economic conditions deteriorate, though current credit quality remains strong.

Q: Glenn Schorr asked about AI's potential as an efficiency driver.

A: Brian Moynihan discussed AI's impact, with examples like Erica interactions (2 million customer interfaces in 24 hours) and ongoing implementation across the company, noting it's not theoretical but actively applied.

Q: John McDonald asked about deposit beta and capital markets outlook.

A: Alastair Borthwick said deposit beta would pass through rate cuts, with wealth business fully passing through and global banking doing so on a client-by-client basis. Investment banking pipeline up double digits, with constructive environment for sales and trading.

Q: Jim Mitchell asked about wholesale funding and capital.

A: Alastair Borthwick discussed reducing expensive wholesale funding, with net interest yield expected to improve, and Brian Moynihan mentioned target of 50 basis points over regulatory minimums for CET1 ratio.

Q: Erika Najarian asked about ROTC and efficiency ratio.

A: Brian Moynihan said ROTC could continue to increase, and efficiency ratio improvement depends on revenue mix and expense management.

Q: Mike Mayo asked about AI savings and efficiency.

A: Brian Moynihan discussed AI's role in enhanced intelligence, with 10% savings in coding and ongoing investments, but cautioning on proper implementation.

Q: Chris McGratty asked about credit risks.

A: Alastair Borthwick and Brian Moynihan stated credit portfolios remain strong with low charge-offs, and the company is comfortable with responsible growth.

Q: Ken Usdin asked about loan growth and retail deposits.

A: Alastair Borthwick said commercial loan growth is robust with attractive spreads, and retail deposits are growing but seasonality and normalization post-pandemic are factors.

Q: Betsy Graseck asked about NII guidance and expenses.

A: Alastair Borthwick discussed NII guidance for 2026 and flat expenses expected in Q4 due to flattish headcount, with constructive capital markets environment.

Q: Gerard Cassidy asked about consumer deposits.

A: Brian Moynihan said consumer deposits have normalized post-pandemic, with the company gaining market share in core transactional accounts.

Q: Saul Martinez asked about commercial loan risk and capital markets sustainability.

A: Alastair Borthwick explained commercial loans are in high-quality, diversified pools with low risk, and capital markets businesses are sustainable due to client relationships, strong structures, and holistic customer view.