The following is a summary of the Bank of America (BAC) Q1 2024 Earnings Call Transcript:
Financial Performance:
- Bank of America reported net income of $6.7 billion and earnings per share of $0.76 for Q1, rising to $7.2 billion and $0.83 after excluding the additional FDIC assessment.
- Net interest income exceeded guidance at $14.2 billion. Deposits grew by over $20 billion quarter-end.
- Nearly $1.6 billion was reported in investment banking fees, a 35% increase from Q1 2023.
- Investment and brokerage services revenue increased 11% to nearly $3.6 billion year-over-year.
- The bank returned $4.4 billion to shareholders by way of dividends and share repurchases.
- The bank reported a return on average assets of 83 basis points and a return on tangible common equity of 12.7%.
- The bank ended the quarter with total assets of $3.27 trillion, up $94 billion from the previous quarter due to increased global market activity.
- The bank bought back $2.5 billion in shares and paid out $1.9 billion in common dividends.
Business Progress:
- Bank of America’s digital platforms added 245,000 new checking accounts and received over 2 billion interactions with its virtual banking assistant, Erica.
- It added 7,300 net new wealth relationships with Merrill and the private bank.
- The bank invested in middle-market investment banking and dual coverage teams, growing from 15 to over 200 bankers since 2018.
- Adoption of Zelle surpassed the combined number of checks written and cash withdrawals from tellers and ATMs for the quarter.
- In wealth management, the bank reported record revenue of $5.6 billion and $1 billion in net income.
- Despite higher provisions and lower net interest income, the global banking unit reported earnings of almost $2 billion.
- Merrill clients’ digital engagement was at 86%.
- The bank sees more robust capital returns from Q2 2024 as rules clarifying capital requirements are expected to become clearer.
- Net interest income is projected to improve in the next quarters due to stabilizing deposit prices and rates.
- The bank aims to reduce expenses over time, with a projected additional expense of $100 million per quarter in the near future.
- AFS portfolio management and hedging against rate changes have been effective in reducing AOCI risk.
- The bank plans to enter the post-pandemic economy and handle changing customer behaviors while benefiting from technology development and managing balance sheets intentionally.
- Bank of America plans to handle any changes to Basel III standards while retaining its strong position.
- In commercial businesses, the bank sees a normalization for IB line and anticipates continuous assets under management flows in wealth management.