Bank of America Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights

• The company changed accounting for tax-related equity investments, recasting numbers for prior periods with insignificant impact on net income.
• Q4 net income $7.6 billion (up 12% y/y), EPS $0.98 (up 18% y/y), revenue up 7% y/y. Net interest income up 10% y/y to $15.9 billion on FTE basis.
• Expenses in Q4 were $17.4 billion, up <4% y/y, with over 300 basis points of operating leverage.
• Balance sheet: Total assets $3.4 trillion, deposits up $17 billion, loans up 8% to $1.17 trillion.
• Organic growth: Net new consumer checking accounts +680k in 2025; client balances over $6.5 trillion in Wealth and Consumer Banking; consumer investments and workplace benefits over $600 billion each.

Segment Performance

• Consumer Banking: Full year 2025 generated $44 billion in revenue and $12 billion in net income, up 14% from 2024. Q4 2025: revenue $11.2 billion (up 5% y/y), net income $3.3 billion (up 17% y/y).
• Wealth Management: Full year 2025 revenue $25 billion (up 9% y/y), net income nearly $4.7 billion (up 10% y/y). Q4 net income nearly $1.4 billion.
• Global Banking: Full year 2025 earnings $7.8 billion. Q4 net income $2.1 billion, down 3% y/y.
• Global Markets: Full year 2025 revenue $24 billion (up 10% y/y), earnings $6.1 billion (up 8% y/y). Q4 net income nearly $1 billion, up 5% y/y.

Guidance

• Expect net interest income to grow 5%-7% in 2026 compared to 2025, driven by loan/deposit growth and asset repricing.
• Aim for ~200 basis points of operating leverage in 2026. Q1 2026 expenses expected to be ~4% higher than Q1 2025.
• Target ROTCE in the mid- to high-10s, driven by organic growth, expense discipline, and AI/digital investments.

Risks

• Economic uncertainties including geopolitical risks and potential downturns.
• Interest rate fluctuations impacting net interest income and sensitivity to rate changes.
• Potential shift of deposits to stablecoins affecting lending capacity and borrowing costs.

Q: Betsy Graseck asks about expense ratio adjustment due to accounting change.

A: Alastair Borthwick responds that they'll continue driving towards the efficiency ratio range and reassess when in the range.

Q: Kenneth Usdin asks about expense growth and operating leverage.

A: Alastair Borthwick and Brian Moynihan discuss organic growth, expense discipline, and AI/digital impact on headcount.

Q: Mike Mayo asks about technology spend and AI.

A: Brian Moynihan talks about technology spending increases, AI's impact on reducing headcount needs, and examples like Erica's usage.

Q: John McDonald asks about ROTCE timeline.

A: Brian Moynihan discusses working towards mid- to high-10s ROTCE through balance sheet growth and waiting for final regulatory rules.

Q: Matthew O'Connor asks about loan growth drivers and credit card expectations.

A: Alastair Borthwick talks about mid-single-digit loan growth expectations and ongoing initiatives to accelerate credit card growth.

Q: L. Erika Penala asks about expense messaging and efficiency ratio.

A: Brian Moynihan emphasizes focusing on delivery over projections, with efficiency ratio improving on apples-to-apples revenue comparisons.

Q: James Mitchell asks about deposits and NII outlook.

A: Alastair Borthwick discusses deposit pricing discipline, growth in Global Banking and consumer deposits, and NII expectations.

Q: Christopher McGratty asks about funding remix and loan growth expectations.

A: Alastair Borthwick talks about reducing wholesale funding and ongoing efforts to drive loan growth across segments.

Q: Glenn Schorr asks about deposit sluggishness and IB pipeline.

A: Brian Moynihan discusses deposit trends and stabilization, while Alastair Borthwick talks about IB pipeline strength and client coverage investments.

Q: Steven Chubak asks about GWIM targets and operating leverage.

A: Alastair Borthwick discusses GWIM's competitive advantages and ability to deliver acceleration with operating leverage.

Q: Gerard Cassidy asks about credit losses and stablecoin impact.

A: Alastair Borthwick talks about low loss provisions and stablecoin impact concerns, while Brian Moynihan discusses stress testing and responsible growth.

Q: Saul Martinez asks about credit losses normalization and consumer deposit growth.

A: Alastair Borthwick mentions expected normalized loss levels and consumer deposit growth potential towards GDP-plus levels.