Bank of America at Barclays Financial Conference: Strategic Growth Insights

On Monday, 08 September 2025, Bank of America (NYSE:BAC) participated in the Barclays 23rd Annual Global Financial Services Conference. The discussion, led by CFO Alastair Borthwick, provided a detailed look at the bank’s strategic initiatives and financial health. While highlighting growth opportunities and strong asset quality, Borthwick acknowledged challenges in closing the relative value gap compared to peers.

Key Takeaways

• Bank of America is optimistic about consumer resilience and strong commercial asset quality.
• The bank plans an investor day to detail its diversified business and growth strategies.
• Technology investment, including AI, is a priority for revenue and expense efficiencies.
• NII is expected to grow due to core balance growth and fixed-rate asset repricing.
• Regulatory changes, particularly Basel III, are seen positively by the bank.

Financial Results

• NII Guidance: Q4 is projected at $15.5 to $15.7 billion, a 6% to 7% increase annually. Q3 NII is expected around $15.2 billion.
• Loan Growth: Increased by 7% year-over-year in Q2, with higher balances across all segments.
• Deposit Growth: Achieved eight consecutive quarters of average sequential growth, with trends normalizing.
• Fees: Investment and brokerage services are expected to rise in the high single digits, while investment banking fees align with a 10% to 15% overall fee pool increase.
• Expenses: Q3 expenses are anticipated to be around $17.3 billion, slightly up from Q2 due to revenue growth.

Operational Updates

• Consumer Business: Emphasizes a payment strategy to drive net new checking accounts through digital and marketing efforts.
• Wealth Management: Focuses on net new relationships, with over 60% of Merrill clients having a banking relationship with the bank.
• Global Banking: Growth is driven by existing client expansion and new client acquisition, with investments in the middle market and international platforms.
• Global Markets: On track for a 14th consecutive quarter of year-over-year revenue growth, with investments in balance sheet, technology, and personnel.
• Technology: Plans to invest $4 billion in growth initiatives and expense efficiencies next year, leveraging AI in fraud prevention, customer service, and finance.

Future Outlook

• NII Growth: Expected to continue due to core balance growth and asset repricing.
• Investment Banking: Anticipates a multi-quarter comeback driven by demand for repositioning.
• Capital Deployment: Prioritizes supporting growth and future investments, with share buybacks as a secondary focus.

Q&A Highlights

• Consumer Credit Quality: Despite weak unemployment numbers, consumer resilience remains strong.
• Share Price Performance: The bank’s performance lags behind G-SIB peers, with opportunities to reprice securities over time.
• Payment Strategy: Central to future growth, with stablecoins being explored as a new payment form.

For further details, refer to the full transcript below.

Full transcript - Barclays 23rd Annual Global Financial Services Conference:

Unidentified speaker, Conference Host: Here we go. We could just put up the first ARS question. We love Zelle, so next up, kicking off our afternoon session, I’m very pleased to have Bank of America, Alastair Borthwick, the Chief Financial Officer, representing. Alastair, welcome back.

Alastair Borthwick, Chief Financial Officer, Bank of America: Thanks for having me.

Unidentified speaker, Conference Host: You know, it’s interesting. We always reach out to the investment community and say, "Oh, what questions should we ask? We ask this for each company." You know, it’s usually NII, expenses, you know, what’s the trading update for the quarter? I’m sure we’ll get to all that. Interesting, the number one question was, is it’s investor day.

Alastair Borthwick, Chief Financial Officer, Bank of America: Yes.

Unidentified speaker, Conference Host: It’s been 15 years since Bank of America’s last investor day. You know, why now? What are you hoping to accomplish? Maybe kind of what do you want us to learn?

Alastair Borthwick, Chief Financial Officer, Bank of America: I think the most important thing from our perspective is we feel like we’ve got an opportunity to close a relative value gap. We’re not entirely satisfied as a management team with where we stand right now on relative value. We feel like we’ve got a lot of growth opportunities across the various lines of business. I think we’ll probably get into that later on. This will really give us a good opportunity to go business by business, opportunity by opportunity, to lay out for people what we think we can do over the course of the next few years. We’re excited about that. I think it’s a natural evolution in some ways of what we’ve been doing up in Boston at the Analysts Association meeting. It just allows us a little more transparency with our investors.

If that’s going to be helpful for people hearing about growth over time, improving returns over time, then we’re eager to provide people the information.

Unidentified speaker, Conference Host: Got it. We’ll be there.

Alastair Borthwick, Chief Financial Officer, Bank of America: Thank you.

Unidentified speaker, Conference Host: Thank you. Maybe kind of start big picture. Maybe start with the consumer. You guys have, you know, probably some of the best data out there serving almost 70 million consumer small business clients. You obviously have the Wealth Management franchise. Could you just talk to in terms of what you’re seeing? Friday’s non-payroll numbers seem to spook some people. There’s kind of cross-current of activity there. Any observations I think we’d appreciate.

Alastair Borthwick, Chief Financial Officer, Bank of America: It has been very stable so far through the quarter and actually through much of the year. We’ve talked about the fact that last year was a record year for consumer spend in the U.S., up 3%, 3.5% on our cards. This year that’s accelerated. Last time we got together at earnings, we said it was somewhere between, you know, closer to 4.5%. It actually accelerated this year. Here we are midway through the quarter. That spending trend continues. As we look through to the asset quality, we talked about the fact that with less in the way of late-stage delinquencies at the end of Q2, we anticipated consumer net charge-offs should come down again this quarter. Generally speaking, I’d say we’re kind of on track with that.

The consumer at this point appears to be exactly where we were, resilient, doing well, in a good position, and that’s reflected in our asset quality numbers.

Unidentified speaker, Conference Host: Got it. Maybe just on the wholesale side there too, between tariff and trade policy uncertainties and the like, what are you seeing and hearing on that front?

Alastair Borthwick, Chief Financial Officer, Bank of America: Very similar on the asset quality side. You know, the commercial side of our house has been really clean over the course of the past several years with, you know, one area of commercial real estate office that has had its own systemic issues, return, you know, flexible workspace plus higher interest rates. As we look at that progressing, that’s behaved the way that we thought it might at the end of last year, i.e., as we just keep taking down the size of that book, as we keep taking down the size of the NPLs, you know, we should continue to see that just have less and less of an impact on asset quality. That’s been the case this year. We anticipate that will continue. The rest of commercial asset quality is really strong at this point.

The hardest thing then becomes if you’ve got a very big commercial book like we do, and if you’re off of a base of very, very low, it doesn’t take a lot to change. We haven’t seen anything there. It feels very good to us at this point. Credit at this point just isn’t a story.

Unidentified speaker, Conference Host: Got it. Maybe just translate that into in terms of loan growth. I mean, despite kind of these uncertainties, you know, Bank of America has kind of been an outperformer there. I think it was up 7% year over year in the second quarter. You know, every segment seeing higher balances on a year over year ending quarter basis. Maybe talk to kind of what’s driving this growth, what’s differentiating you, and just how do you think that translates to the back half of the year?

Alastair Borthwick, Chief Financial Officer, Bank of America: I think we have a good organic growth story in each of our lines of business. We try to put that forth in earnings every quarter, just giving some of the highlights from each of the businesses. At the end of the day, all of them are trying to grow their customer base. All of them are trying to do more with their existing clients. That core underlying organic growth shows up in loan balances. In addition to that, I think what differentiates us, we’re obviously in a substantial capital position, meaning excess capital. I think that’s true for many in the industry, but we’re definitely in that position. We also have a substantial liquidity position. All things being equal, we’d prefer to have our excess of deposits over loans in loans rather than in securities.

We have a big securities portfolio, and we’re looking to redeploy that out of there and into loans. That remains an important thing for us. We’ve also benefited from the fact we have a big global markets business, and we’ve continued to invest in that global markets business. With the continued development and growth of private markets, having longstanding relationships with those investors, having the capital, the liquidity, and the structuring ability to then be able to support that, that’s been a further part of our own growth story. It’s all lines of business fueled largely by organic growth and then a couple of differentiating factors to add to that.

Unidentified speaker, Conference Host: Just maybe on deposits while we’re here, you’ve seen steady growth, I think eight consecutive quarters of average sequential deposit growth. How do you view the growth going forward and what impacts do you see on deposit balances, costs, particularly with the Fed and maybe cuts next week as people tell me they will?

Alastair Borthwick, Chief Financial Officer, Bank of America: On the balance side, it’s just this continued return to more and more normalcy that we’re seeing now. Obviously, we went through a period of very dramatic deposit gathering, and then we went through a period of things beginning to normalize a little as deposits flowed out of the industry. Now, increasingly, if we were to look at our Global Banking business, it’s very normal relative to year-over-year seasonal patterns. Consumer is now picking up that normalcy in a more predictable manner. Wealth is just bottoming out and will grow from here. We’re encouraged with the way, as time passes, the deposits are beginning to look more and more normal. I think that will continue again next year. In terms of next week, we’ll respond according to what the Fed does. Were the Fed to cut rates, then obviously we will change pricing pretty immediately.

All of that’s baked into our NII forecasting.

Unidentified speaker, Conference Host: All right, we’re going to come back to NII forecasting.

Alastair Borthwick, Chief Financial Officer, Bank of America: Sure.

Unidentified speaker, Conference Host: I just want to maybe pull off for a second and talk about kind of maybe the biggest growth opportunities for Bank of America, you know, where you’re investing to drive growth. Maybe we think about it kind of consumer bank, wealth management, and global banking and markets, maybe just kind of one or two of your most favorite growth initiatives in each.

Alastair Borthwick, Chief Financial Officer, Bank of America: I think, look, again, one of the reasons that we’re going to do an investor day is to go through that in some detail with all of you. Ours is a big company. We are very diversified. We hold an earnings call every quarter. We go through how we’re doing. We regularly get feedback from folks like yourself that our speech is too long. The tricky thing is that when you’re trying to cover a company like that, you need to spend time to engage with people so that they really understand what it is we’re trying to do. Doing an investor day allows us to do that business by business and then talk about some things that cut across all of the businesses. If I were to think about, for example, the consumer business, there’s a lot going on there.

Obviously, they are very focused on a payment strategy that allows them to drive net new checking, core net new checking. That’s really important to them. In addition, they’re constantly thinking of ways to use digital and marketing to their advantage, and those two increasingly are interlinked: digital marketing, personalized offers, et cetera. You’ll hear that from the consumer team. When we get to wealth management, for them, it’s all about net new relationships, gathering wealthy families and their relationships. It’s bringing in more flows, and it’s converting more and more of them to have a banking relationship with Bank of America. I think Merrill now is up over 60%. That obviously still gives us a very substantial opportunity to grow from here. We’ve grown that very steadily over the course of time. We can share with you what that looks like.

We can share with you what it looks like in the future. That puts a fortress around relationships. It’s very good for the stickiness of those customers with us, and it is good for driving the profitability of that business. That remains one of the important initiatives there. In global banking, most of their growth is fueled by doing more with existing companies that we bank and turbocharged by net new additions. More important in the lower end to the commercial bank and to business banking and small business banking. Obviously, at the upper end, GCIB, they bank the very largest companies in the world, and our market penetration there is extremely high. They will talk, though, about our middle market investment banking business and what we’re doing there to invest and grow. You’ve seen us continue to add headcount in local markets all across the U.S.

Always with Global Banking, the international platform is one that we can invest in and can grow in, and we’re excited about sharing some of the things we’re doing there. That’s Global Banking. Global Markets, at this point, we’ve got 13 successive quarters of year-over-year revenue growth. We’re on track right now for a 14th this quarter. What Jim and the team are doing there is just continuing to invest in balance sheet, technology, people, as we continue to drive that business. They’re doing more in the way of loans with the largest investors in the world, many of whom are expanding their own business. We’re catching some of that growth as well. Jason, I’d say that if those are kind of the line of business specific, then there’s a variety of things that we do across the whole company that we’ll talk about at Investor Day.

We’ll tell you a little bit about what we’re doing with our technology investments. We’ll invest another $4 billion in new growth initiatives and/or new expense efficiency ideas. Another $4 billion plus next year. We’ll talk a little bit about AI, how that impacts things. It can have a revenue impact. It can have an expense impact. We’ll talk a little bit about that. We can update you on digital and on marketing. Importantly, and I know many people here know this, a core part of our strategy has been local markets business integration. This idea that in any given city where Bank of America is operating, we’ve typically got multiple lines of business in that city, and they are coordinating and working with one another to introduce clients to one another. We feel like that’s an important differentiator for us. We haven’t just started this.

We’re well over 10 years in this journey. I think Dean Athanasia will likely give an update to everyone in terms of what we’re doing there. That’s a lot. That’s why it takes a day. You can’t get through that every earnings call. We’re excited to bring that to people.

Unidentified speaker, Conference Host: is a lot there, and I want to delve into all of it. I appreciate we don’t have the time, and I’ll say we have the rest of your day. One thing you touched on is AI. You obviously invested there. There are a lot of use cases, a lot of patents. Maybe just update us on some of your investments there and how that could drive some of these efficiencies you touched on.

Alastair Borthwick, Chief Financial Officer, Bank of America: Erika is obviously the best example we have right now. 20 million customers using Erika. It’s now saved us 3 billion interactions. You can think about that in terms of the people and time saved over time to give clients a great experience. It also helps to enhance the client experience because a person might take a little longer to find the information that Erika will find for people near instantly. That’s obviously been important for us. We’ve taken that same technology and given it to our commercial clients. I think we shared last time at earnings that now 65% of our commercial clients who use CashPro, so that’s our main payment system that we give to corporate clients, 65% of the clients are now doing 40% of their interactions using CashPro chat. You can think of that as an extension of Erika in the commercial world.

90% of our employees are using Erika for their own questions, and it’s saving our own internal service desk thousands of hours of people answering questions from people like you and me. You know, where’s my, where can I find about my 401(k) or where can I find this thing that I’m looking for? Our coding teams with, you know, 18,000 people who are now using GitHub, that we think is saving us, you know, 15%, 20% of their time. These are productive use cases at scale. There is a variety of things that now we feel like we can deploy, and we have deployed in areas like fraud, customer service departments, more and more tools for groups like my own group, the finance group.

We’re still towards the early innings, but we’re encouraged with just the number of things we’ve been able to use at scale already and the benefits that we see from that.

Unidentified speaker, Conference Host: Got it. All right. Now maybe flipping to financials, we’ll put up the next ARS question.

Alastair Borthwick, Chief Financial Officer, Bank of America: Yeah.

Unidentified speaker, Conference Host: You know, loan and deposit growth plus fixed-rate repricing of assets and cash flow swaps. You talked about an NAI in Q4 of $15.5 to $15.7 billion. I guess first off, do you feel good about that? Maybe help us determine which factors you think will determine the higher or upper end of that range and just maybe beyond the next couple of quarters, just how you think we should think about NAI looking further out?

Alastair Borthwick, Chief Financial Officer, Bank of America: Yeah, so when we put that in place at the beginning of the year, we said we thought we would be somewhere between $15.5 and $15.7. That would take NII up 6% to 7% for the year. That would take us to a new record for NII. When we refreshed that recently, we repeated, reiterated that guidance, no reason to change that at this stage. That included two Fed cuts, so that’s sort of the assumption that we had used. That remains the case today. As of right now, I’d say, yeah, we’re on track for that. We had been asked at the end of the Q2 earnings what did we expect for this quarter. We thought it’d be somewhere around $15.2, i.e., kind of a linear progression, if you like. We still feel good about that.

The things that are going to drive that over the course of the next, you know, call it four months, will be mainly about just core deposit growth. That’ll be mainly it. We’ve seen, you obviously see some impact from rates, but we’re running out of time for that in the course of the year, just given where we are. If there were a substantial rate cut environment over the course of the next four months, that could change things. Broadly speaking, we feel pretty good about where we are at this point. I think it’ll be mainly about deposits and to a secondary degree, it’ll be about loans. Looking forward, we got that question at the end of Q2 earnings, you know, how do you begin to think about next year? We haven’t begun to refine how we think about next year for formal guidance.

If you think about what we benefit from right now, it’s two things. Number one, it’s core organic growth, delivering on balance growth. You can see our balance growth. You can see the loan growth. You can see the deposit growth. You can see what that looks like in the course of this year. Then we get a boost from the fact that we’re replacing fixed-rate assets that are yielding 2% with things that are a 4% environment right now. That phenomenon is going to exist again next year and for the following years. You’re going to see our NII, I would think, kind of growing similar to this year where it’s about core balance growth plus that boost from fixed-rate asset repricing. I think that’s a multi-year phenomenon at this point.

Unidentified speaker, Conference Host: It’s interesting if you look at the audience after NII up 7% to 8%, which is your guidance for Q4 2025 year over year. They see it’s slowing to 4% to 6%, at least to most people, for Q2 2026. We will see.

Alastair Borthwick, Chief Financial Officer, Bank of America: We will see.

Unidentified speaker, Conference Host: I guess we talked about NII. Maybe just talk about NIM over time. Your NIM is running at, I think it was 1.94% last quarter.

In the past, you talked about $220, $230.

Alastair Borthwick, Chief Financial Officer, Bank of America: Yes.

Unidentified speaker, Conference Host: If I take my model and just replace this quarter’s NIM with that NIM, my ROE goes up quite handsomely. How do you think about that?

Alastair Borthwick, Chief Financial Officer, Bank of America: That is a core management team focus right now. We just feel like we have got an opportunity to improve balance sheet efficiency, and we have an opportunity to drive core NAI for the coming years. We feel good about driving net interest margin over time. More broadly, as a management team, we’re focused on driving ROA and focused on driving return on tangible common equity. I think we’re in a good place to continue doing that.

Unidentified speaker, Conference Host: Got it. Maybe on the fee side, you’ve put up some pretty good fee growth. Maybe talk to the primary drivers of that. Maybe kind of third quarter update of what you’re seeing. You mentioned you over your upper markets, but I’d love to delve more into that.

Alastair Borthwick, Chief Financial Officer, Bank of America: The big three for fees tend to be investment and brokerage services. There you’re probably talking about, you know, because it’s largely moving with the markets. You can think about that being the S&P. You can think about that being with the bond markets because obviously our clients have an investment in both. Investment and brokerage services is going to be up in, you know, towards the high single digits as a general matter. When it comes to investment banking, the investment banking fee pool is up 10% to 15%. I think we’ll be, you know, kind of in line with that. Maybe we do slightly better, but we need to see. We’re not finished yet with September. I would think we’re going to have a good investment banking quarter this quarter. In terms of global markets, you know, Jim wants to put up a 14th consecutive quarter.

Right now, we think that’ll be kind of up mid-single digits, year over year. That’s what we’re driving towards. Pretty good fee growth in the core fee areas. It remains a good fee environment for us.

Unidentified speaker, Conference Host: I guess with that being said, no good deed goes unpunished. How does that translate onto the expense side of the house?

Alastair Borthwick, Chief Financial Officer, Bank of America: Yeah.

Unidentified speaker, Conference Host: Talk to in terms of maybe near-term expenses, and then we can talk about looking out.

Alastair Borthwick, Chief Financial Officer, Bank of America: In terms of near-term, you know, Q2 earnings, we were asked the question, what do you think Q3 should look like? We said it should look pretty flattish because we anticipated running the company with pretty flat headcount. That’s where we are right now. We’re running the company with pretty flat headcount. That said, when you see the revenue come through, we also said if we were to see continued revenue growth, that will be the thing that would push expense slightly higher. I think we’re probably somewhere around $17.3 billion for expense from $17.2 billion in Q2, just given the revenue. The philosophy of our management team remains the same. The NAI has to drop to the bottom line. There’s going to be an element of headcount discipline that just keeps the expense where expense is going to be. There’s going to be some revenue that is compensable revenue.

It comes with expense. That’s good expense. Obviously, in a quarter like this where we feel like we’re seeing pretty good fee growth on top of the NAI growth, we just have a little bit of pressure coming from the expense side there. It’s largely revenue-related.

Unidentified speaker, Conference Host: That’s fair. I think you also.

Alastair Borthwick, Chief Financial Officer, Bank of America: By the way, the one thing I should just say, it’s just to repeat this because I think it’s important, our focus remains on just driving operating leverage. We talked about the fact we see operating leverage coming back in the second half. We do, we should be in a position to deliver operating leverage in Q3. That then allows us to make sure that we’re driving the earnings per share in the way that we want to.

Unidentified speaker, Conference Host: Right. No, that makes sense. I think you touched on this, you know, potentially you could see expenses seasonally lower in Q4. Is that still on the table or just because of this fee momentum?

Alastair Borthwick, Chief Financial Officer, Bank of America: Yeah, it just depends on the fee side. You know, it tends to be a quieter quarter for Global Markets. Investment brokerage should do along with the markets, whatever they do. We need to see with investment banking. We will see how Q4 develops, but that remains our thought process. The headcount should be pretty flattish, and that’s the main driver for expense.

Unidentified speaker, Conference Host: Right. I guess on the investment banking front, it feels like a really good quarter. How does it feel about, you know, that some people feel like this could be like a multi-quarter kind of comeback for investment banking, given the pickup we’ve seen in M&A and IPO activity? Just kind of your thoughts on just despite the fact you’re realizing revenue is where pipelines stand, and also just on markets, any particular color between equities, FIC, and the like.

Alastair Borthwick, Chief Financial Officer, Bank of America: Yeah, we’d obviously hope so with respect to investment banking. Matthew, I think, will give a longer-term perspective around just where investment banking fee pools are today relative to where they’ve been over the course of time. One would think that we’re in a position where, with some pent-up demand for repositioning on the forms of corporate management teams, we could see a reasonable environment for investment banking going forward. In the same way that we’ve seen a reasonable environment for global markets, it’s been pretty constructive for both FIC and equities over the course of the past two or three years. In the case of global markets, you’re doing naturally shorter-dated things. When people go into a period of volatility and repositioning based on policy or interest rates or geopolitics, it can be a very good environment immediately, and it can stay that way for a while.

With investment banking, it takes a little longer because you’re talking about strategic transactions that relate to companies with long-dated perspectives. You have to look through some of the policies, and you have to look through some of the interest rates to think about what that means for the long term before you commit to a large-scale capital program or before you commit to a sale or a purchase. You can see why investment banking would be, it may take a while, but there is an awful lot of firepower out there to transact. We have a world-leading investment banking franchise, and we’re well positioned to take advantage of anything that happens.

Unidentified speaker, Conference Host: Got it. Earlier, we kind of talked to macro. You touched on consumer credit quality and office, you know, CRE. Any other areas of concern out there?

Alastair Borthwick, Chief Financial Officer, Bank of America: Not at this stage. We’ve been pretty flattish now on net charge-offs, and we feel good about where the world is at this point. It’s been interesting to me just how good commercial asset quality has been. It’s been gratifying to see the consumer, the consumer card, as that’s flattened out over time. That’s been good to see; it’s performing the way that we underwrote that risk. We’ve been pretty happy with the asset quality position so far. No news there, no update.

Unidentified speaker, Conference Host: I guess we’ve seen, you know, Bank of America obviously makes a lot of money. You know, it’s your, and on top of that, you have excess capital, you’re making more capital. Capital requirements are coming down, at least kind of post this year’s stress test and maybe even further. Just talk about how you’re thinking about deploying that capital.

Alastair Borthwick, Chief Financial Officer, Bank of America: Our first priority, our first move is to support the growth of the company, to invest in our future, and to support our clients. That remains the case. We’ve seen pretty good loan growth over the course of the past year. We would love to see that continue. That’s going to be our number one priority. We’d like to grow into the capital base, if you like. Obviously, once we take care of the dividend and the REDCap minimums, that affords us some flexibility. We’ve gone over time from doing very little in the way of share buyback to $1 billion, then up to $3.5 billion, then $4.5 billion. More recently, we did $5.25 billion. I think you can expect that run rate for now. We’ll just see how the capital base develops over time. We obviously do have a lot of capital. We do have a lot of flexibility.

That’s going to allow us to pick our spots. We’re pretty long-term oriented, and we have the opportunity to do at least what we’re doing currently and potentially to do more over time as we see everything develop. We still got to wait for some of the capital rolls also because notwithstanding the fact that we see some positive developments and positive news, it takes a while for those to get in place. We’ll make sure that we make our decisions over time.

Unidentified speaker, Conference Host: I guess on that front, maybe you could talk about your thoughts around just capital and the regulatory environment, you know, based on what we’ve seen, what you expect. What do you think are the most kind of impactful regulatory changes regulators can make more broadly?

Alastair Borthwick, Chief Financial Officer, Bank of America: I’ve been encouraged to see changes around the supplemental leverage ratio. I think that’s been appropriate. I think that’s good. It gives us more flexibility. We’re happy to see that. Basel III final, we were very encouraged with Governor Bowman’s Capital Conference because we have an opportunity to gather an awful lot of people who have an important perspective on capital to talk about what the issues are. Perhaps the most important thing over the course of the next three and a half years will be to try and finalize Basel III. That has been going on since 2017. It’s been an eight-year process. It would be good for the industry to get to a resolution there. There are some important things that you have to solve as part of that.

One of them, for example, is around the stress capital buffer, this fact that if you put market risk and operational risk in Basel III final, in the U.S., we already have market risk and operational risk expense in the stress capital buffer. You run the risk of a double count. We were able to articulate our point of view there that that seems like it’s solvable, but it’s definitely an issue. I was encouraged by the Capital Conference. I think everybody was able to put their perspectives on the table. We’ll see where the Fed takes that from there. There’s also the G-SIB buffer, where the most important thing from our perspective has been the United States uses Method I and Method II. There are two pretty straightforward fixes.

You can either go to Method I only, which is how the rest of the world operates, or you can index Method II for the fact that inflation over the course of the past 10 years has meant that all banks are bigger, all the big U.S. G-SIBs are bigger, but they’re not bigger as a percentage of the system because the S&P’s gone up in 10 years, and the bond market’s larger in 10 years, and our clients are bigger in 10 years, and our competitors are bigger in 10 years. We feel like either you move to a single method, which would be consistent with Basel III final and harmonization, or you have some kind of indexing for inflation and GDP. Either one of those would be a good thing. There’s more to do. These are complicated things. It takes a while.

In the meantime, nothing’s changed for us. We just operate the way that we do, run the company the same way. Over time, I anticipate that there’s an opportunity here. I’m encouraged to see the Fed taking a look.

Unidentified speaker, Conference Host: Helpful. If we could skip to the fourth ARS question, you could skip the third one, just put up the fourth. While they put that up, you know, in the past, you know, Bank of America has pointed to kind of a mid-teens ROTC. We talked about, you know, the NIM improving, driving that higher. Is that the biggest factor, and what other factors should we consider when thinking about how ROTC can improve, you know, in the near and longer term?

Alastair Borthwick, Chief Financial Officer, Bank of America: Yeah. This is one of the things we’ll talk about at Investor Day also, because it’s not just about the growth. It’s also about the potential to improve returns over time. I’ve just talked about the fact that for the course of the foreseeable future, we see NII growth that’s going to be organic growth and balances plus a boost from fixed-rate asset repricing. That’s the sort of growth that should drop to the bottom line. In addition, we’ve got a pretty interesting opportunity to drive fees in the big three areas where we have world-class franchises. We feel like we’ve got a pretty good opportunity there. When we maintain expense discipline, headcount being the main driver, 60% to 70%, then we’re in a position to drive operating leverage over time. It’s been a while since we delivered that.

We feel like the second half of this year is what we’ve told people we would do. We feel like we’re on track for that. We feel good about delivering on the operating leverage. When you then think about all those things added together, you see an efficiency ratio that’s going to improve over time. You see ROA that’s going to improve over time. We see return on tangible common equity improving over time, net interest yield improving over time. We have that opportunity. We told people when we touched the 12% return on tangible common equity, we weren’t satisfied. Next up is 13%, check. Next up is 14%. Next up, 15%. That’s the way we’re thinking about it. We’ll lay that out for people so folks can see that.

We’ve got a pretty good opportunity, and we feel like we’re going to have a pretty good quarter that should be in line with that.

Unidentified speaker, Conference Host: Is 15% kind of the stopping point or?

Alastair Borthwick, Chief Financial Officer, Bank of America: No, 15% is not the stopping point, but it’s like everything. I was in a group meeting the other day. We were talking about the fact that we were internally in a little bit of internal competition. My group was in sixth, let’s say, out of ten. Someone said, let’s go find out what number one does. How about we go find out what number five does first? You’re always looking to improve based on making that next incremental 1%. That’s our mindset. We don’t have a destination because the destination might be too low. There was a period of time, I think, when people were asking Brian, when we were at 1%, can you get to 10%? That was a long time ago. He didn’t want to get trapped into that because you don’t know 10% might be too low.

It turns out 10% was too low for this franchise. It is too low for this franchise. Right now, we have an opportunity ahead of us to continue improving return on tangible common equity year after year. We feel like that’s one we’re going to try and take advantage of.

Unidentified speaker, Conference Host: Good answer. I can tell. If we could put up ARS question number four when you get a chance, you can skip number three. I’m not sure if the audience has any questions while they tabulate that. I think there’s one in the front here.

Alastair Borthwick, Chief Financial Officer, Bank of America: Right there. I’m going to be able to hear you, but no one else will, you see.

Unidentified speaker, Conference Host: Any sign of deteriorating, including in the consumer credit?

Alastair Borthwick, Chief Financial Officer, Bank of America: The question was, how do you reconcile weak unemployment numbers over the course of the past three or four months with pretty good consumer asset quality to this point?

Unidentified speaker, Conference Host: Yeah.

Alastair Borthwick, Chief Financial Officer, Bank of America: I’ll say this. We obviously have perfect information on our card book, and we underwrote those clients over the course of the past decades. I feel like we’ve got a long-term risk appetite that we’re prepared to express, consistent with what we consider to be responsible growth, that allows us to identify the customers we’re looking to bank through the course of a cycle. What you’re referring to in terms of unemployment weakness is what, three months, four months? We haven’t seen that yet in our numbers. I feel like this is one of those consistent things over the course of the past two or three years where people regularly ask us, have you seen the consumer weaken? Have you seen the consumer weaken? Have you seen the consumer weaken? We haven’t seen the consumer weaken yet. There’s a lot more than just unemployment.

Unemployment is a very important driver for card, no question, number one. Remember also, home prices are in a very good place right now. Employment going from 4.2% to 4.3%, it’s in a very good place right now. Wealth generally, I’m thinking now about the markets, is in a very good place right now. The balances we see on us are still in a very good place. Even when we look at the consumer payment rate or we look at the consumer balances outstanding, they have plenty of firepower still. There’s a lot more than just four months of unemployment that goes into today’s cards number, but the card numbers still remain in a good place.

Unidentified speaker, Conference Host: Again, Alex, I want to give you a chance to respond because the question to the audience was, you know, why do you think Bank of America’s share price performance has lagged its G-SIB peers? Their own response was relatively large unrealized HTM losses, which to my knowledge, every single security to date has matured at par pretty much. I think you’d expect every other security to mature at par. Maybe just talk to how that dynamic plays out.

Alastair Borthwick, Chief Financial Officer, Bank of America: Yeah, so listen, I think that might just be that you’re putting those words. The answer might be hold to maturity securities in terms of, you know, the category generally. I think if you look back, we’ve now repriced $150 billion or so of our securities, but we still have $500 billion to reprice. There’s a pretty significant opportunity at this point for us to reprice securities over time. I think if you are a buyer of our shares today or you’re a holder today, that’s what you’re going to benefit from because all of them are going to mature. They’re going to mature over time. We’re going to reinvest them over time. It is going to provide a lift to our NII. That is the future opportunity for shareholders at this point.

Unidentified speaker, Conference Host: A couple more minutes. I’m not sure if there’s any other questions from the audience. I guess something I wanted to ask about earlier is maybe you touched on it, but just maybe you could give an update on your kind of payment strategy and how your offerings are driving the business and just how you’re thinking about this evolving landscape. Stablecoin is something that’s coming up a bit, just your thoughts there.

Alastair Borthwick, Chief Financial Officer, Bank of America: Payments has always been the core of how we think about driving the company’s future growth because obviously when you talk about attracting net new checking in consumer, what attracts them to a place like ours is the payments infrastructure, what they can do once they open an account with us, together with all the different forms of paper or in-person or electronic, digital, whatever it may be. We try to make sure that we offer the most compelling payments platform for consumers and for commercial. When we do that, we tend to be able to grow that core operating account both on the consumer side and the commercial side. I think we’re going to put a spotlight on our payments business at investor day. You’ll hear about that. We’re really proud of that part.

It’s the backbone of the company in many ways, and perhaps the most important thing that we do. Stablecoin is just a new form of payment. Brian’s talked about the fact that whether it comes down to us developing our own stablecoin or working with an industry consortium, we will move down the path to do that. We’ll just have to see how the customers use it because, you know, you think about your own personal lives. You’ve got cash. You’ve got checks. It might have been a while since you wrote a check, but you have it. You can wire. You can ACH. You can use your credit card. You can use your debit card. Stablecoin is going to have some pretty stiff competition in terms of just ease of use. There may be some use cases like low-value cross-border payments.

We’ll need to see how the customers actually use that. In the case of something like, you know, some of the things like Venmo, we went with an industry solution called Zelle. Zelle today is larger than cash plus checks added together for us. Other things like buy now, pay later, people prefer credit cards. We’ll have to watch how user acceptance develops over time. Our intent is to make sure that we have a really high-quality payments infrastructure for our clients to choose from. If this is a new form, we’ll make sure that we’ve got that for our clients.

Unidentified speaker, Conference Host: Great. On that note, please join me in thanking Alastair for his time today.

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