Earnings call transcript: Bank of America Q3 2025 earnings beat forecasts, stock rises

Bank of America Corp reported stronger-than-expected earnings for the third quarter of 2025, with earnings per share (EPS) reaching $1.06, surpassing the forecast of $0.95. Revenue also exceeded expectations, coming in at $28.09 billion against a forecast of $27.48 billion. The bank’s stock reacted positively, rising 5.12% in pre-market trading to $52.19, nearing its 52-week high of $52.88. According to InvestingPro, the company maintains a solid market capitalization of $389.24 billion, positioning it as a prominent player in the banking sector. InvestingPro data shows 11 analysts have recently revised their earnings estimates upward for the upcoming period.

Key Takeaways

• Bank of America’s Q3 EPS of $1.06 beat forecasts by 11.58%.
• Revenue increased by 11% year-over-year to $28.2 billion.
• The stock price surged 5.12% in pre-market trading following the earnings announcement.
• Strong growth in investment banking fees and commercial loans contributed to the earnings beat.
• The bank returned $7.4 billion to shareholders through dividends and share repurchases.

Company Performance

Bank of America demonstrated robust performance in Q3 2025, driven by significant growth in both revenue and earnings. The bank’s diversified business model and strategic focus on technology and AI have contributed to its strong financial results. Compared to the same period last year, revenue rose by 11%, and EPS increased by 31%, underscoring the effectiveness of its growth strategies. The bank’s return on tangible common equity (ROTCE) was 15.4%, and its efficiency ratio improved to below 62%.

Financial Highlights

• Revenue: $28.2 billion, up 11% year-over-year
• Earnings per share: $1.06, up 31% year-over-year
• Return on assets: 98 basis points
• ROTCE: 15.4%
• Investment banking fees: Up 43% year-over-year

Earnings vs. Forecast

Bank of America’s Q3 2025 earnings surpassed expectations, with EPS of $1.06 against a forecast of $0.95, resulting in an 11.58% surprise. Revenue also beat projections, coming in at $28.09 billion compared to the expected $27.48 billion, marking a 2.22% surprise. This performance reflects the bank’s successful execution of its strategies and its ability to capitalize on market opportunities.

Market Reaction

Following the earnings announcement, Bank of America’s stock rose by 5.12% in pre-market trading, reaching $52.19. This increase reflects investor confidence in the bank’s strong financial performance and positive outlook. The stock’s movement places it close to its 52-week high, indicating strong market sentiment. InvestingPro analysis suggests the stock is currently undervalued, trading at an attractive P/E ratio of 15.35x. The bank’s shares have demonstrated remarkable momentum, gaining over 33% in the past six months. For detailed valuation metrics and more insights, check out the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Looking ahead, Bank of America expects net interest income (NII) growth of 5-7% in 2026, with Q4 NII projected to be $15.6 billion or higher. The bank remains focused on organic growth and technology investment, with plans to provide a detailed long-term outlook during its Investor Day in November. The bank’s strong financial position is further evidenced by its impressive 11-year streak of consecutive dividend increases, currently offering a 2.24% yield. InvestingPro subscribers have access to over 30 additional financial metrics and insights that can help evaluate the bank’s growth trajectory. Discover why BAC is among the 1,400+ US stocks covered by comprehensive Pro Research Reports.

Executive Commentary

CEO Brian Moynihan emphasized the benefits of the bank’s diversified business model, stating, "Our results underscore the benefits of a diversified business model." He also highlighted the role of technology, noting, "We believe applied technology... provides constant leverage and constant reinvestment with the same expense base."

Risks and Challenges

• Interest rate changes: Could impact net interest income.
• Economic slowdown: May affect loan growth and consumer spending.
• Regulatory changes: Could impose additional compliance costs.
• Competition: Increasing competition in the financial sector.
• Market volatility: Potentially affecting investment banking and trading revenues.

Q&A

During the earnings call, analysts inquired about the bank’s AI implementation and its potential to drive efficiency gains. Other questions focused on deposit growth strategies and the impact of interest rate changes on net interest income. The bank addressed these concerns by highlighting its disciplined expense management and strategic focus on high-quality, diversified assets.

Full transcript - Bank of America Corp (BAC) Q3 2025:

Call Moderator: Good day, everyone, and welcome to today’s Q3 Bank of America Earnings Call. At this time, I would like to turn the program over to Lee McEntire. Please go ahead.

Lee McEntire, Investor Relations, Bank of America: Good morning. Thank you. Thank you for joining us to review our third quarter results. Our earnings release documents are available on the Investor Relations section of the bankofamerica.com website. Those documents include the earnings presentation that we’ll make reference to during the call.

Brian Moynihan will make some brief comments before turning the call over to Alistair Borthwick, our CFO, to discuss more of the details in the quarter. Let me just remind you that we may make forward looking statements and refer to non GAAP financial measures during the call. The forward looking statements are based on management’s current expectations and assumptions, and those are subject to risks and uncertainties laid out. Factors that may cause our actual results to materially differ from expectations are detailed in the earnings material and available on the SEC filings on the website. Information about non GAAP financial measures, including reconciliations to U.

S. GAAP, can also be found in our earnings materials and are also available

Brian Moynihan, CEO, Bank of America: on the website. With that, Brian, over to you. Thank you, Lee, and good morning, and thank you all for joining us. Bank of America delivered a strong third quarter with good growth both in the top line revenue and bottom line EPS, all driven by strong operating leverage. Our ROTCE improved to 15.4%.

This quarter’s results provide good momentum as we finish 2025 and head into 2026. We have been demonstrating consistent organic growth for many quarters. This quarter’s results highlight the continued organic strength of our world class deposit and lending capabilities. Our results also underscore the benefits of a diversified business model with top tier position not only in lending and deposits, but also across the markets driven businesses in Wealth Management, Global Markets and Global Banking. Before I turn it over to Hollister, I can hit a few highlights here.

We reported revenue of $28,000,000,000 up 11% year over year. EPS was $1.06 up 31% year over year. We drove operating leverage of five sixty basis points in the quarter. The efficiency ratio fell below 62%. The return on assets reached 98 basis points.

And during the quarter, we returned to our shareholders $7,400,000,000 through dividends and share repurchases. Net interest income on an FTE basis reached a record $15,400,000,000 That was supported by strong commercial loan and deposit growth along with continued balance sheet positioning. Investment banking fees exceeded $2,000,000,000 up 43% year over year. Our team in sales and trading grew revenue 8% marking our fourteenth consecutive quarter of year over year revenue growth. Our asset management fees increased 12% compared to last year.

All the business segments contribute to earnings improvement and had growth in earnings. Two stood out this quarter. Our consumer banking team delivered $3,400,000,000 in after tax earnings, up 28% year over year with 600 basis points of operating leverage. This reflects strong revenue growth This business is driven off the core operating accounts of our consumer customers and we gained more than this quarter. These accounts have strong balances per account.

The customers give us great customer scores and we operate them at lower costs with more primacy in the account and lower attrition compared to anyone in the industry. That is a winning combination. Our global wealth and investment management teams posted net income of nearly $1,300,000,000 up 19%. That was driven by the strong Merrill and Private Bank Advisor productivity and concomitant continued growth in fee based assets. Lending in this business was particularly strong with $12,000,000,000 in loan growth in this quarter.

GWIM also opened another 32,000 banking accounts and grew deposits $3,000,000,000 from quarter two. As we look ahead, we believe this quarter’s performance continues to reflect the impact of the investments we have made on a continuous basis for many years in technology, talent and client experience. These continue to translate into strong financial results. We have been growing loans with the right risk and deposits as we continue to gain market share through organic growth. That translated into continuous NII improvements and complement our growth our fee based businesses this quarter.

I also, as usual, commend you to look at the digital slides in the appendix on slides twenty, twenty two and twenty four. They show the continued progression across all the businesses of Applied Technology. With lots of discussions going on about technology and AI and other things, we give you the stats. What you’ll see in these slides is the customer facing activities of Erica, for example. There are many other applications of AI going on in this company, but this one has been handling successful interactions for years with scale and that application has now been applied across other businesses and even across our employee base.

So we are confident in our trajectory of our results and we are excited about the opportunities ahead. We look forward to talking to you at Investor Day in November. I’m going turn it over to Alistair to walk through the financials in more detail.

Alistair Borthwick, CFO, Bank of America: Thank you, Brian. And I’m going to start with Slide three to begin our discussion. And I just have three things on the income statement that I want to add to Brian’s comments. First, we’re pleased with the continued demonstration of expense discipline across our businesses. So in the third quarter, we delivered 11% year over year revenue growth significantly outpacing 5% expense growth and resulting in that strong 6% operating leverage.

Of the 28,200,000,000 total revenue, an aggregated amount of $11,300,000,000 came from our sales and trading, investment banking and asset management fees, three of our more highly compensable market facing areas. So those areas grew 15% year over year in the aggregate and we’re excited to continue our investments given their strategic importance and attractive returns. When coupled with investment spending and inflation, this revenue growth helps frame the 5% expense growth even better. Importantly, expense growth versus the second quarter was held to under 1%, while those same compensable revenue streams grew 8% sequentially, further reinforcing our ability to scale efficiently and invest where it matters most. Second, provision expense improved this quarter with net charge offs declining 10% and we had a modest reserve release as a result of both credit card and commercial real estate improvement.

The strong asset quality reflects the continued strength of our credit portfolio, years of disciplined risk management and higher growth of the portfolio than other banks with good credit results. Lastly, our average diluted share count declined by 24,000,000 shares from the second quarter and this quarter included the dilution we’ve highlighted before in our filings and that comes from our 2008 issued convertible preferred Series L stock. On slide four, you’ll note the various earnings highlights Brian and I have talked about. I don’t have much to add here and would instead spend just a moment on our continued organic growth, which is powering our loan and deposit activity. We added new clients and we deepened relationships with existing clients.

And across consumer, wealth, commercial and institutional businesses, our teams are winning in the marketplace by putting our clients first. As always, we highlight the continued organic growth across each of our businesses driven by client engagement, disciplined execution and strategic investment And you can see the results there on slide five. Consumer banking continued to show strong momentum. We grew another 212,000 net new checking accounts, extending our string of consecutive growth to 27 quarters. This includes the fourth consecutive quarter of increased average non interest bearing deposits.

And those are important because they are the primary operating account for a relationship and they’re quite beneficial as a low cost funding source. Additionally, card, home and auto loan balances grew year over year reflecting healthy consumer demand and we believe those further cement the relationship beyond just the operating account alone. In small business, we continued our strength, our string of lending growth and we remain the number one leading provider of credit to small business in The United States. Global Wealth and Investment Management saw client balances climb to more than $4,600,000,000,000 driven by strong AUM flows of $84,000,000,000 in the past year, strong loan originations and market appreciation. Our advisors continue to deliver comprehensive solutions to help clients achieve their financial goals.

In Global Banking, we saw a nice pickup in client activity in Investment Banking, resulting in market share gains, leadership rankings across many products and the highest non pandemic fee quarter in our firm’s history. Commercial client activity showed a continuation in the demand for loans and cash management needs as treasury service fees increased 12% year over year alongside deposit growth of 15%. Global markets continued to deliver on their string of year over year revenue growth and also continued to grow loans from healthy demand of our clients. Let’s transfer to a discussion of the balance sheet using slide six, where you can see total assets ended the quarter at $3,400,000,000,000 That’s down $38,000,000,000 from the second quarter as good loan growth was offset by lower global markets assets and wholesale funding reductions as part of our plan to continue to tighten the balance sheet. Importantly, this balance sheet tightening will continue to benefit the net interest yield, NII.

Deposits ended just over $2,000,000,000,000 and were up $72,000,000,000 from the year ago period with growth in both interest bearing and non interest bearing deposits. Average global liquidity sources of EUR961 billion remained strong and shareholders’ equity of EUR304 billion was up EUR4.6 billion from last quarter as we issued EUR2.5 billion of preferred stock. Otherwise, dollars 2,000,000,000 increase in tangible common equity to $2.00 $8,000,000,000 included a modest capital build as net income was slightly more than capital distributions and we saw some improvement in AOCI. We returned $7,400,000,000 of capital back to shareholders with $2,100,000,000 in common dividends paid and $5,300,000,000 of shares repurchased. Tangible book value per share of $28.39 rose 8% from the 2024.

Looking at regulatory capital, our CET1 level increased modestly to $2.00 $3,000,000,000 while the risk weighted assets were relatively flat and that drove our CET1 ratio higher to 11.6%. This is well above our October 10% regulatory minimum. Our supplemental leverage ratio was 5.8% versus a minimum requirement of 5%, which leaves capacity for balance sheet growth and our $473,000,000,000 of total loss absorbing capital means our TLAC ratio remains comfortably above our requirements. On slide seven, we show a ten quarter trend of average deposits to illustrate the extension of consecutive growth across those periods. Average deposits were up $71,000,000,000 or 3.7% from the 2024.

Average consumer deposits were up 1% year over year, while global banking deposits grew 15% compared to a year ago. Our global capabilities, digital solutions and relationship managers continue to win clients in the marketplace. In addition, we remain disciplined on pricing to achieve that growth. Overall rate paid on total deposits declined 32 basis points year over year reflecting both lower rates and disciplined actions in our global banking and wealth management businesses. Rate paid on the roughly $950,000,000,000 deposits remained low at 58 basis points in Q3, driven by the operating nature of that account and client base.

Compared to the second quarter, total deposit rate paid rose two basis points due to mix shift into interest bearing and we expect improvement next quarter driven by repricing after the Fed funds rate cut in late September. Let’s turn to loans by looking average balances on slide eight. You can see loan balances in Q3 of $1,150,000,000,000 improved 9% year over year driven by 13% commercial loan growth. Consumer loans grew at a slower pace and importantly were up across every loan type. For the second consecutive quarter, every business segment recorded higher average loans on both a year over year basis and on a linked quarter basis.

Focusing on commercial loans and global markets, we continue to take advantage of the strong financing demand in the marketplace from institutional borrowers where we lend against diverse collateral pools. Small business is benefiting from our newly combined local market based coverage model for small business and business banking and that’s creating more capacity for client expansion. And lastly note the 9% improvement in wealth management as affluent clients borrowed for investments in assets like sports and arts and businesses. So all of that balance sheet activity across deposits and loans results in net interest income. And let’s turn our focus to NII on slide number nine.

On a GAAP non fully taxable equivalent basis, NII in Q3 was 15,200,000,000.0 On a fully taxable equivalent basis, NII was a little less than $15,400,000,000 And as I said earlier, that’s up 9% from the 2024. NII grew $1,300,000,000 year over year and $572,000,000 on an FTE basis over the second quarter driven by higher loan and deposit balances and benefits from fixed rate asset repricing And versus Q2, we also gained an extra day of interest. The net interest yield improved seven basis points from the second quarter reflecting the growth in NII, while the earning asset balance modestly declined as loan growth replaced lower yielding securities and global markets balances declined modestly. And as I said, we reduced expensive wholesale funding and cash. Regarding interest rate sensitivity on a dynamic deposit basis, we provide a twelve month change in NII for an instantaneous shift in the curve.

So again, that means interest rates would have to instantaneously move another 100 basis points lower than the expected cuts that are already contemplated in the curve. So if you think about that 100 basis points below what the curve implies more simply put that would mean for instance on the short end, the July Fed funds rate next year would be getting down to 2.25%. So on that basis, a 100 basis point decline would decrease NII over the next twelve months by 2,200,000,000 And if rates went up 100 basis points, NII would benefit approximately $1,000,000,000 With regard to a forward view of NII, let me give you a few thoughts. In January and again in April, we provided our expectation that we could exit 2025 with NII on a fully taxable equivalent basis in a range of 15.5 to $15,700,000,000 We also noted our expectation for that growth to accelerate in the 2025. Despite all the uncertainties we’ve experienced around tariffs and rates, we’ve seen good performance against our expectations.

And even with the third quarter, late quarter interest rate cut and with the curve anticipating two more cuts in October and December, we believe fourth quarter NII will be in the higher end of that range of expectations. So think of that as being $15,600,000,000 plus on a fully taxable equivalent basis. And that would represent approximately 8% growth from the 2024. Thinking a bit more generally, we just note for the full year of 2026, our expectations about the drivers of growth are largely aligned with 2025 performance. We expect good core NII performance driven by core loan and deposit growth a little bit above GDP, which will additionally benefit from sizable fixed rate asset repricing.

And in 2026, we expect to see roughly 10,000,000,000 to $15,000,000,000 in combined quarterly mortgage backed securities and mortgage loans. Those will roll off and they’ll be replaced with new assets at 150 basis to 200 basis points higher yield. That should result in full year NII growth somewhat similar to 2025 performance over 2024. So think of that as something like 5% to 7% growth. Okay.

Let’s turn to expense and we’ll use slide 10 for the discussion. First, I just want to highlight the strong operating leverage, which we expect again in Q4. We reported $17,300,000,000 in expense this quarter and that was up modestly compared to the second quarter and up 5% year over year. As I noted earlier, the year over year increase was primarily driven by incentives tied to growth, especially in our market facing businesses as well as ongoing investments across the enterprise. Looking ahead to Q4, we expect expenses to remain roughly in line with Q3.

As you know, headcount is the key driver of expense from compensation and benefits to occupancy costs and technology. And we manage this closely not just in total numbers, but also in organizational structure ensuring we’re striking the right balance of managers and teams. And the good news is we continue to manage headcount well. So looking at the past three years, we’ve been able to lower our headcount from a peak of 217,000 to 213,000 now. And more recently since the third quarter of last year, we’re down 500, which includes the addition last quarter of nearly 2,000 plus college grads.

And it’s this disciplined approach that supports both efficiency and growth. So let’s now move to credit and turn to slide 11. And you can see asset quality remained sound with improvements in several key indicators. Net charge offs were $1,400,000,000 down about 10% from the second quarter with the improvement split pretty evenly between credit card and commercial real estate. The total net charge off ratio this quarter was 47 basis points, down eight basis points from Q2.

Q3 provision expense was $1,300,000,000 and mostly matched net charge offs. We had a modest reserve release associated with improved outlooks for both credit card and commercial real estate. Focusing on total net charge offs again and looking forward in the near term, we would not expect much change in total net charge offs given the steady consumer delinquency trends, stability of C and I and reductions in CRE exposures. On slide 12, in addition to the improvement in consumer losses, note the reductions in both reservable criticized and non performing loan metrics commercial portfolios. Non performing loans are down 19% from Q2 and reservable criticized exposure in commercial real estate is now down nearly 25% from the 2024 as we dealt with the more problematic exposures across the year.

Let’s turn to the performance across our lines of business beginning with Consumer Banking on slide 13. Consumer Banking delivered strong results generating $11,200,000,000 in revenue, up 7% year over year and 3,400,000,000 in net income or 28% growth. Return on allocated capital rose to 31%. These results reflect the value of our deposit franchise underscoring both the breadth of our platform and the success of our organic growth strategy and digital banking capabilities. Innovation such as family banking, our high value cash back credit cards and our industry leading preferred rewards program are delivering differentiated value to clients and value we believe is unmatched elsewhere.

This client value proposition combined with disciplined pricing helped drive a 9% year over year increase in net interest income. Another strong highlight this quarter was expense management, which enabled us to deliver more than 600 basis points of operating leverage. Continued innovation and the deployment of advanced technology and tools helped us to hold expense growth to just 1% year over year while revenue grew significantly. As a result, our efficiency ratio improved falling below 50% for the quarter. We continue to invest in high-tech, which drove higher digital engagement and we continue to invest in high touch.

We continued our march into new markets, filled out more of previously expanded markets and supported our brand in those communities. As an example, we just opened four new financial centers in Idaho over the past six months, expanding our presence and complementing our existing Merrill team in the local market to better serve clients in that region. Consumer investment balances grew 17% to EUR $580,000,000,000 supported by market appreciation and EUR 19,000,000,000 in full year client flows. Third quarter average balance per new account of $110,000 is up 6% from last year. And the investment platform serves as a great catch basin for first time investors and for more affluent investors looking to manage some element of their own money.

As mentioned earlier, consumer net charge offs improved on a linked quarter basis following a decline in delinquencies. The largest component of consumer losses is credit card and our loss rate decreased from 3.82 to 3.4% linked quarter. This contributed to an improved risk adjusted margin on credit card approaching 7.5%. Finally, as shown on appendix appendix slide 20, strong digital adoption and Erica engagement continues and customer experience scores remain elevated reflecting the impact of our ongoing investments in digital capabilities. Turning to Wealth Management on slide 14, the business delivered a strong quarter marked by improved profitability.

Net income grew 19% year over year to nearly $1,300,000,000 driven by new household growth, strong AUM flows, loan growth and disciplined expense management that produced meaningful operating leverage and a 26% return on allocated capital. We achieved 300 basis points of operating leverage, which contributed to a 27% pretax margin, an improvement of over 200 basis points. Together, Merrill and the Private Bank managed 4,600,000,000,000 in client balances and continued to generate organic growth with $84,000,000,000 in AUM flows over the past year. This reflects a healthy mix of new client assets and existing clients putting more capital to work. During this past quarter, Merrill and the Private Bank added 5,400 net new relationships with the average size of new relationships continuing to grow across both businesses.

And importantly, we’re not just adding relationships, we’re deepening the ones we enjoy already. And reflecting the strength of our integrated model and our product offering, the percentage of clients with banking products continue to rise and it’s now at 63%. In the third quarter, GWIM reported record revenue of $6,300,000,000 up 10% year over year led by a 12% increase in asset management fees. Loan growth remained strong and we saw a notable pickup in custom lending with both volume and loan size increasing and that drove a 9% year over year increase in average loans. Finally, I’d highlight the continued digital momentum as shown on slide 22.

New accounts are increasingly being opened digitally underscoring the effectiveness of our digital investments and the evolving preferences of our clients. On slide 15, you see the results for Global Banking, which benefited from improved investment banking activity, significant deposit growth and solid loan performance. In Q3, Global Banking delivered net income of $2,100,000,000 up 12% year over year supported by 500 basis points of operating leverage and a 17% return on allocated capital. The standout driver of performance was a 43% year over year increase in firm wide investment banking fees, which fueled 7% overall revenue growth. Firm wide investment banking fees rose across the solution set.

Advisory was up 51%, debt underwriting increased 42% and equity underwriting grew 34%. We maintained our number three position year to date and we also gained market share during the quarter. Notably, we participated in several of the industry’s largest transactions, a clear testament to the value clients place on our financial advice and solutions. Non interest expense grew compared to last year as we continue to invest in the future. And average deposits grew 15% year over year contributing to a 6% increase in global transaction services revenue.

And importantly, disciplined pricing coupled with lower rates led to a 47 basis point decline in rate paid compared to a year ago. Switching to Global Markets on slide 16, I’ll focus my comments on results excluding DVA as we typically do. As Brian mentioned, we extended our streak of strong revenue and earnings performance and once again achieved a solid 13% return on allocated capital. In the third quarter, Global Markets generated net income of $1,600,000,000 up modestly year over year and consistent with the prior quarter. Revenue excluding DVA grew 10% year over year driven by strong sales and trading performance and the benefit of higher investment banking revenue shared with Global Banking.

Focusing on sales and trading, revenue ex DVA rose 8% year over year to $5,300,000,000 FICC revenue grew 5% driven by improved performance in credit products. Equities trading led the improvement with 14% revenue growth supported by increased financing activity in Asia. Expense growth year over year reflects both the revenue increase and higher trading related costs in certain Asian markets and those costs are passed through to clients and therefore appear in both the revenue line and the expense line. As noted earlier, we continue to benefit from lending opportunities tied to highly collateralized pools of high quality assets and clients value our expertise and the liquidity we provide in delivering these solutions. On slide 17, all other shows a loss of $6,000,000 in the third quarter with very little to talk about here.

Our third quarter effective tax rate was 10.4% and excluding the tax credits related to investments in renewable energy and affordable housing and a small number a small amount of discrete items, the effective tax rate would have been much closer to a normal corporate tax rate at approximately 23%. So thank you. And with that, we’ll jump into the Q and A.

Call Moderator: We’ll take our first question from Glenn Schorr with Evercore. Your line is open.

Glenn Schorr, Analyst, Evercore: Hi, for question. Hey,

Lee McEntire, Investor Relations, Bank of America: before you start, let me just say, it seems like, one of the phone lines may have cut out at some point during the call, but the webcast was working throughout. So, just a reminder that the website will have the replay of the call in case you were on one of the lines that might have had a break in it. So, Glenn, go ahead.

Glenn Schorr, Analyst, Evercore: No problem. No problem. So Alistair, heard your question your comments on the expense message for the fourth quarter. So appreciate that. I guess I have a bigger picture AI question of, okay, big banks still are you’re ahead of the curve in terms of digitizing the whole franchise.

But with the infusion of AI throughout the organization and you still have big manual functions throughout the firm, why aren’t you and others talking about AI as a huge efficiency driver of better margins in the years to come? Is it just a little too far off? Am I a little too optimistic? I’m just curious on that front. I think your operating leverage is great.

I’m not talking about that. I’m just talking about AI’s potential in general.

Brian Moynihan, CEO, Bank of America: So I think Glenn, it’s Brian. Good to hear your voice. Look, we believe applied technology, which is a range of outcomes from the digitization that we show on those pages in 2022 and 2024 over the period of time And the customer adoption of technologies in interfacing with our company and technology always provides that. So we had 285,000 people fifteen years ago, we have 213,000 people. Three years ago, we had 217,000 people.

After pandemic and all the manual stuff we had to build up, we’ve worked that back down. So we believe strongly that all technologies help drive that. And this technology and artificial intelligence allows you to do things that you heretofore haven’t done. And so I think the question is just it’s to put it in place, have to have your data appropriately arrayed. You have to make sure the models are going to give the right answer.

It has to be in a controlled environment because in a regulated institution like ourselves, we don’t get it. Excuse saying the model said it, sorry, has to be right. And so if we turned down a mortgage loan under automated underwriting, we’re liable for the outcome irrespective of how we did it. So we’re seeing it go everywhere and the volumes activity of the company have gone up huge since that period of time where the headcount has come down by a lot. And so we continue to apply it.

What I’d look at carefully on those pages is things like on the consumer page, you’ll see Erica interactions building up and Erica users building up and we’ve gone from two ten questions that could be answered to 700. But just to put that in context, over the last twenty four hours, there were 2,000,000 interfaces where a consumer got an answer from Erica and our company and that same technology is applied in institutional basis. I think you can see it on page 22, if I’m right, or maybe 24, but you can see that Erica in the institutional, lot smaller number of customers, but rising very fast. So that’s just one model. We have models all over the company.

So we believe strongly that this will have an impact. We will continue to manage it. But the implementation, these are not proofs of concept and things like that. They’re past tense things happening, 2,000,000 customer faces yesterday. So this isn’t something to come.

We’ve been out of it a while. But I think the idea of it providing constant leverage and constant reinvestment with the same expense base is really what we’re after and then grow the revenue faster, continue to take market share. So its impact on expenses is felt. We are reinvesting some of that to actually grow faster and you’re seeing the results of that.

Glenn Schorr, Analyst, Evercore: Okay. So that more revenue and same expenses would still bring us better margins in the future. That’s really where I’m going. It sounds like you agree, but you don’t want me to pin you down on a point in time.

Brian Moynihan, CEO, Bank of America: Yes. I think the to say this will happen next week or the week after, you have to be a little careful because we have to get it right. That model took us years to perfect. It’s not something you can snap your fingers at, and make happen. And we have it’s human being changed too.

So stay tuned. We’ll give you more of that broader. We’ll have the experts talk to you in early November. But it’s here. It’s working.

I’m proud of the team for taking it to implementation across the board. But it allows us to continue to manage this company with just in the last five years, we have 20% more core checking holders and consumer than we did five years ago. Think about that. And consumer checking balances are up by percent in that time. If you think about the leverage in that and that’s why the consumer kicking in as the NII kicks in, you’re seeing them have such good year over year results.

Glenn Schorr, Analyst, Evercore: Okay. I appreciate that. Thank you.

Call Moderator: We’ll move next to John McDonald with Truist Securities. Your line is open.

John McDonald, Analyst, Truist Securities: Hi, good morning. You guys had good results across all your capital markets businesses, sales and trading, IB, wealth. It’s always hard to have an outlook here. But just wondering broadly how you’re feeling about the environment, pipelines and investments made in those businesses against what’s usually a seasonally slower fourth quarter and coming off such a strong 3Q?

Alistair Borthwick, CFO, Bank of America: Thanks, John. I’ll start with Investment Banking. We’ve obviously seen a pickup in activity here in the third quarter. We were happy to see that. As we’ve seen more certainty now around trade and tariffs and around taxes as well, it’s allowed our client base to make longer term decisions and that’s reflected in our investment banking activity.

In terms of the pipelines, they’re up this quarter, up over double digits. So we feel good about the pipeline and the way it’s developing. And we’ll need to see how the transactions execute in Q4, but it feels like a good environment in terms of for example M and A at this point. Around the Global Markets business, we’ve obviously invested significantly there just as we have in investment banking. I should go back to investment banking and the investments we’ve made there.

We’ve always profiled the investment we’ve made in middle markets and in international and in earlier stage faster growing economies. So that’s been a big part of our investment banking growth in the course of the past year or so. When we get to sales and trading, we’ve obviously invested a lot there in terms of technology and people and balance sheet. Normally Q4, you see a seasonal impact from client activity slowing as you move into the fourth quarter that would be pretty normal. But the constructive environment for the sales and trading business remains as investor clients continue to reposition based on rates and policies as they develop around the world.

So it feels like a continued constructive environment for the global market sales and trading business.

John McDonald, Analyst, Truist Securities: Great. Thanks, Alastair. And just also you mentioned deposit beta. What are you expecting for deposit beta across your various businesses if we continue to see the Fed moving rates down?

Alistair Borthwick, CFO, Bank of America: Well, I think you’ll see us do the same thing we’ve been doing. In the wealth business, obviously, we tend to move with money market rates. Those tend to be a full pass through. So in the wealth business, I’d expect us to fully pass through rate cuts from this point forward. And around Global Banking, while we always do it on a client by client basis, particularly around interest bearing, we’d expect to pass through as the rate cuts develop as well.

So I’d expect you to see us with the same disciplined pricing on the way down as we offered on the way back up. And the only thing I think you just have to remember is because September rate cut came so late, you won’t see that in our Q3 numbers, but you will see it in our Q4 numbers.

Saul Martinez, Analyst, HSBC: Got it. Okay. Thank you.

Call Moderator: We’ll take our next question from Jim Mitchell with Seaport Global Securities. Your line is open.

John McDonald, Analyst, Truist Securities: Hey, good morning. Alistair, you noted you took down more expensive wholesale funding on the liability side, which kept the balance sheet relatively flat, which seems more NIM accretive than NII accretive. So the question I guess is how many quarters of that do you expect and what sort of earning asset growth should we expect over the next year or so?

Alistair Borthwick, CFO, Bank of America: Yes. So we’ve talked about that that would be a focus for us over time. People ask us about net interest yield, we try to explain it’s going to improve over time based on two things. First is net interest income is going continue to increase. And the second is the balance sheet we don’t think will grow quite as fast as the loans and deposits grow.

And that’s because there’s still some more wholesale funding that we can pay down. As you point out, it doesn’t cost us anything in terms of NII, but it is net interest yield accretive. So we’ve got a little bit more of that to do. It won’t be the major part of our NII net interest yield accretion. But I think you can almost think about it being kind of like 1% slower maybe over the course of the next year or so.

John McDonald, Analyst, Truist Securities: Okay. No, that’s helpful. And then just maybe pivoting to capital. You guys, as you noted, you’re well above your 10% minimum. It seems like we have G SIB surcharges likely coming down and other reforms.

Why not how do you think about the buffer where it is today? And what prevents you from taking that down a little bit? And if you have a longer term target that would be great.

Brian Moynihan, CEO, Bank of America: Our target will be as we said before Jim sort of 50 basis points over the regulatory minimums. And so you should expect us to keep working that down, interesting enough, the ratios are flat this quarter because the extra earnings and stuff. So we took $7,300,000,000 of capital and put it back in there. You’d expect us to continue at a good rate. And then through good organic growth, is what we use the capital for, we use up some of it and then we’ll continue to work it down if that organic growth isn’t sufficient to use up the capital over the near term.

We got to get these rules finalized, so we make sure all the different years is it 10, is it 10.2 on the averaging. This is all flopping out there. You’d expect in the first half of next year. The intent is there. The outlines of rules there.

The adoption of the actual rules is what we want to make sure it gets through and then we’ll adjust. But our hope would be to grow our way through it because then you’d see a lot more earnings. If not, we’ll just keep peeling down the capital.

John McDonald, Analyst, Truist Securities: Okay. Fair enough. Thanks.

Call Moderator: We’ll move next to Erika Najarian with UBS. Your line is open.

Erika Najarian, Analyst, UBS: Hi. Good morning. You reported clearly a standout quarter with a ROTCE or ROTCE of 15.4%. I know I’m probably jumping ahead of what you plan to say on November 5, Brian, but one of your closest peers Wells Fargo did put out a medium term target of 17% to 18%. JPMorgan has had a 17% RoTE target through the cycle for a long time.

Given that you’ve hit this target now, should we presume that this is something that you could sustain over the near term and perhaps continue to work upwards sort of closer to those peer targets?

Alistair Borthwick, CFO, Bank of America: So Erica, I mean, I think you should expect us to continue to walk our return on tangible common equity north from here. We plan to take you through that at Investor Day. But I think if you take the kind of NII growth that we anticipate, you compound that over several years. When you think about the organic growth of the platform delivers and then you think about the boost we get from fixed rate asset repricing and you combine that with the fee growth, it gets pretty interesting over time. So we’ll walk you through that when we get together in November.

Erika Najarian, Analyst, UBS: Great. And on the efficiency ratio, one of your peers talked about a natural inflation rate just in labor of 3% to 4%. And clearly, you’re delivering operating leverage this quarter and what you’re implying for the fourth quarter as well. I guess this is a two part question. As we think about how you’re framing that ROTCE walk in 2026, do you sort of plan to move away from the 1% to 2% expense growth, and talk about efficiency instead?

Or is there sort of enough still identifiable, inefficient expenses in the franchise that you could recycle, and perhaps continue on sort of lower sort of expense rate target?

Brian Moynihan, CEO, Bank of America: I think, Erica, there’s a lot of pieces of that. But the expenses in our company are driven by the numbers of teammates and then what we pay them. And so our job is to keep using the technology as we just as I discussed earlier that continues to allow us to do more with the same amount of people or less people. And then to pay those people more in relation to the productivity of the company. And so, yes, there’s an embedded cost of teammates that grow and we want it to grow because FA compensation grows, PCA private bank private bankers client compensation grows, investment bankers because that grows more directly in line with revenue.

But think about it in a broad context. We keep the headcount basically running flattish. The volumes across at the NII across at higher and the growth that’s coming is through some of the markets related businesses and then managing headcount appropriately around in the back office and other types of things, that’s good. What AI does is it gives us a chance to manage some of the expense base a little differently going forward than we had in the past, which will be helpful. And so we feel good about that.

Whether it’s the idea is to grow revenue as fast or faster than expenses and create operating leverage is a simple way to think about it. But it’s complex. And then the actual efficiency ratio, remember, this gets down to comparisons between companies or business mix. So our wealth management ratio inherently 74% at 26% pretax margin, consumers at 50%. Banking is down below 50%.

It really you got to sit how much your revenue is coming through the various pieces will determine the aggregate efficiency ratio. Our job is just to continue to improve it.

Erika Najarian, Analyst, UBS: Improve from the 62%. Got it. Thank you so much.

Call Moderator: We’ll take our next question from Mike Mayo with Wells Fargo Securities. Your line is open.

Mike Mayo, Analyst, Wells Fargo Securities: Hey, Brian. You left me hanging with that last answer. When you talked about the efficiency ratio, you expect to improve 65% last year, last quarter and 62% and improve the efficiency ratio to what? Do we have to wait to November 5? Or is that something that is kind of not guide to or and also in terms of I’m just looking for some more meat on the bone so to speak.

I mean, I guess year over year headcount is down 500 and revenues are up $3,000,000,000 So I think that’s kind of what you’re talking about. But where does that eventually take you to given your business mix?

Brian Moynihan, CEO, Bank of America: Look, the question is where is the revenue coming from for the next four quarters? NII is obviously much more efficient in the sense of cost because same loan balances, the same people producing additional credit relationships, the embedded cost of production and consumer for the million cards we do new cards we do a quarter, number one small business lender in the country and producing good growth there. That all falls to bottom line. The expense base is built to have that kind of activity growth. So we feel good about it.

We’ll give you more guidance, but at the end of the day it will be a result of where the revenue is coming from, especially in the markets business and how much that impacts it. But you should be very confident Mike we manage expenses well in this company and the headcount well and so we’ll continue to do that.

Mike Mayo, Analyst, Wells Fargo Securities: Could you just give us a little bit more on AI? I mean, you’re ranked top 10 globally as far as a bank and using AI and with your patents and everything else. And it’s getting back to that first question on this call, How much savings do you have from AI? How do you measure those savings? What are some of the best initiatives you think you have?

Or just help us frame how that could transform the company a little bit more if you could?

Brian Moynihan, CEO, Bank of America: Yes. As I said, with a little bit more time to dedicate to that discussion, we’ll have a panel of the experts show you what the work we’re doing. But I’d make three or four points about AI. Our view of AI is it’s enhanced intelligence that the teammates are going to be critical delivering the services and therefore it’s an enhanced intelligence not an artificial intelligence. The second is, it’s not something to think about.

It’s something happened, as I said yesterday, 2,000,000 customer interactions were handled through the Eryka platform just on the consumer side alone. So and then the third thing is, we think the paybacks are coming in there. But what’s interesting is that the places we can apply it are different than some of the other technologies we’ve had in the past. So and we’ll take you through that. So we feel good about it.

It ought to help with the overall efficiency of the company relative human cost being 60%, 70% of our costs. And but it comes with higher technology cost, higher work. So just in the coating area, we’ve saved about 10% of the aggregate amount of coders we have working, but we’re dedicating that to drive more efficiency. So we’ll take you through all that. It’s exciting.

It’s not a theoretical question of Bank of America. It’s an applied question of Bank of America. But you do have to be careful about extrapolating things that have to be done right in order to work. And the $3,000,000,000 we spent on data in sort of 2014 to 2019 to get the data perfect in this company or as perfectly we could, perfect as beyond reach. But that kind of number has to be spent by competitors and we spent it admittedly for potentially a little bit different reason, but it takes that much work.

Mike Mayo, Analyst, Wells Fargo Securities: All right. I’ll take that as a teaser for November 5. Thank you.

Glenn Schorr, Analyst, Evercore: Thanks.

Call Moderator: We’ll move next to Chris McGratty with KBW. Your line is open.

Saul Martinez, Analyst, HSBC: Great. Good morning. On credit, overall, really strong results. I mean, under the hood, if we go a level deep, is there anything that’s giving you a little bit of pause today versus maybe three to six months ago and anywhere that you’re not leaning into with the balance sheet with the growth picking up anywhere you’re avoiding? Thank you.

Alistair Borthwick, CFO, Bank of America: Well, the broad outline is not yet and no meaning not yet. We haven’t decided to change anything and no we’re not really observing anything other than continued strong performance in the credit portfolios. So the report the results we reported today you can see consumer charge offs came down again and commercial charge offs came down again. Now, those commercial charge offs that are really, really low level. So, credit remains in a good place.

We built this responsible growth strategy to do two things. First, to have a risk appetite that we’re proud of through the cycle. And second, to deliver loan growth that exceeds the industry. So we feel like we’re succeeding on both of those right now. Now, when you see headlines, do you immediately do a look across on everything?

Yes. If something changes overnight, do we spend time as a team considering is there anything we should be changing? Yes. But right now the broad message we need to send to people right now is that credit portfolios are performing very well at this point.

Brian Moynihan, CEO, Bank of America: So Chris welcome to coverage of our company. A quarter like this is salubrious in that it shows you can both grow and do it the right way and have great credit results. And if you look beyond that remember our industry the regulated part of our industry the 30 banks or so go through a CCAR test that you get to see the results on. They go through tremendous shared national credit depth of examinations you see. And so I think if you look at the statistics by our industry and our peers, they are in strong shape and the comparisons to 2019 are interesting because that was like a fifty year low in our fifty year good, the best year in fifty years in our company’s credit history.

So we’re comparing it to one of the best years. So we feel very good about it. We can both grow and do it with the right risk and Alistair talked about that. So we’re comfortable and we’re pushing forward.

John McDonald, Analyst, Truist Securities: All right, great. Brian, Alistair, thank you so much.

Alistair Borthwick, CFO, Bank of America: Thank you.

Call Moderator: We’ll take our next question from Ken Usdin with Autonomous Research. Your line is open.

Ken Usdin, Analyst, Autonomous Research: Hi, good morning. Thanks. Just a follow on on the loan growth side. Just a lot of the loan growth you’ve putting on in the commercial side, it looks like it’s been in the market segment. And just wondering just how much both capacity you have continue to build that part of the book?

How much demand you’re still seeing for it? And how you think about like the spreads and returns on that part of the business versus kind of the banking book growth?

Alistair Borthwick, CFO, Bank of America: Yes. So in terms of capacity, we’ve got a lot. And I say that because obviously at $2,000,000,000,000 of deposits and $1,000,000,000,000.01 5 of loans, We’ve got substantial excess that we can provide for clients in the economy over time. So we’ve got a lot of capacity. In terms of demand, I’d say it’s been reasonably robust over the course of the past couple of years.

And we happen to be in a good place to capitalize on that because when you talk about the world’s leading asset managers, we have great relationships with them in our global markets business and in investment banking. And then we’re in a position where we’re not loaned up. So we have the ability to provide the lending capital and then you got to structure it the right way. And we obviously have that capability. So those sorts of things put us in a good position to see that demand.

Spreads have been attractive. A big part of the global markets story of improving returns over time has been growing their loan book with attractive returns and you’ve seen them consistently improve return on capital. So we’ve been happy there. And then only other thing I would just remind you is because these are often so well collateralized and structured, they’re typically investment grade. They typically have better risk ratings than some of the lending that we do in other places.

And our res crit and our net charge offs in this area have been close to zero. So we’ve had terrific empirical performance from this portfolio over a long period of time. Got it.

Ken Usdin, Analyst, Autonomous Research: Okay. And on the retail side, on the consumer side, it looks like consumer deposits on average were down a little bit sequentially. Just wanted to see what you’re thinking about. I know that’s been something that you’ve been looking for to get that mix going more towards retail deposit growth, and it’s been a little bit more wholesale in the last couple of quarters. What are you seeing just in terms of when you expect that to inflect?

And is it just people are putting money elsewhere, whether it’s back in the markets or other places? Just your thoughts on retail deposit growth from here. Thanks.

Alistair Borthwick, CFO, Bank of America: Yes. Well, look, we’re encouraged. If you look back to last year’s third quarter, we’re up. And we were up second quarter to second quarter. So a little bit of this is second to third quarter seasonality.

We feel like we have inflected on consumer. So we’re up 1% year over year. I think you’re detecting from me, would we love to see more growth in consumer? Would we like to be back to the 4% plus that we typically enjoy? Yes, we would.

But remember, we’re coming off of a period where consumer deposits really had to normalize after pandemic. And it was important for us to get to the 2024 where it looks like we kind of bottomed out. Now we’re a year further in and we’re growing the core. So you can see our non interest bearing was up 1%. So look, we’re not at this point, we’re not chasing CDs broadly speaking.

So that’s not where the growth is coming from. We’re trying to make sure these are high quality operating deposits with the clients that really stick with us for the next twenty or thirty or forty years. So that remains the strategy.

Brian Moynihan, CEO, Bank of America: Yes. Alistair, I’d just add. If you look at Page 19 lower left, you’ll see that the growth as Alistair said that the 1 percent $9,000,000,000 from third quarter last year this year was all in the low interest and non interest category, which is the more beneficial part of it. So go back to that 220,000 units of new checking primacy, new checking accounts that are all primary that we focused on the primary account in household. Think of that compounding over the last three years, three quarters of a million brand new checking accounts per year that are 90 plus percent primary in the household, the core of transactional account.

That’s where we see that compounding in. Against that was sort of a buildup of some of the rate seeking activity and a rundown of that. And then secondly against that frankly was the higher end consumers moving their money out of lower end stuff as rates rose that were behind. But if you look in the core bracket of consumer, they’re actually growing the deposits in that business and those customers continue to grow.

Ken Usdin, Analyst, Autonomous Research: Okay, got it. Thanks guys.

Call Moderator: We’ll move next to Matt O’Connor with Deutsche Bank. Your line is open.

Lee McEntire, Investor Relations, Bank of America0: Hi, good morning. Can you talk about how sensitive you are to lower medium and long term rates? We’ve obviously seen a decent drop here just kind of in the context of the benefits from fixed rate asset repricing and the 2.3% NIM that you’ve talked about looking at a couple of years.

Alistair Borthwick, CFO, Bank of America: Matt, I don’t have a great deal to add to what I covered earlier. So when we talk about that asset sensitivity of an instantaneous drop in 100 basis points of both the long end and the short end, it has an impact of $2,200,000,000 of net interest income. So that obviously requires number one, happens tomorrow. Number two, it exists all year. And number three, it happens at the short end and the long end all at the same time.

So I don’t know how you would assign a probability to that, but it’s obviously on the lower end. But we provide it so you get a general sense for asset sensitivity. On the short end, you’d end up seeing probably 80% or so, because so much obviously of the company’s balance sheet just reprices daily. And then the longer end is probably 20% of the sensitivity and that tends to be the fixed rate asset repricing. Then the question becomes, you’ve got fixed rate asset repricing over many, many years, obviously it can impact positively or negatively depending on where rates go and bounce around over that period of time.

So we’ll have plenty of time to guide you I think each quarter as we go through and we can share with you what’s actually happened with rates and then what that means looking forward.

Lee McEntire, Investor Relations, Bank of America0: Okay. And then just on this kind of more medium term NIM outlook that you’ve talked about 2.2%, sometimes it’s Q2, sometimes it’s maybe a little bit higher depending on the mix of earning assets and growth. But just any updates on that as you think about the medium term NIM outlook? Thank you.

Alistair Borthwick, CFO, Bank of America: No update other than we’re one further quarter into that March. We added seven basis points this quarter. We’re up over 2%. And team and I know what we need to do. We just have to keep going.

Lee McEntire, Investor Relations, Bank of America0: Okay. Thank you.

Call Moderator: We’ll take our next question from Betsy Graseck with Morgan Stanley. Your line is open. Hi, good morning.

Alistair Borthwick, CFO, Bank of America: Good morning.

Lee McEntire, Investor Relations, Bank of America1: So, Good morning, Alastair and Brian, I wanted to make sure I got the guidance right here. First off on the NII as you’re thinking about 2026, highlighting that the inputs are similar to this year and you indicated 5% to 7% up NII ’26 over ’25. Is that right?

Alistair Borthwick, CFO, Bank of America: Yes. And the background there Betsy just so you know is we’re obviously going to get pretty good core growth from just the organic behavior of the clients and adding some over time. Think about that like 4% to 5% and then you get a little bit of boost from fixed rate asset repricing. You got a little bit of rate cuts in the future, but when you add all that together, feel like it’s probably something like 5% to 7%.

Lee McEntire, Investor Relations, Bank of America1: Okay, great. That was what I was wondering if it’s just NIM or is that NIM plus volume and it’s all in holistic.

Alistair Borthwick, CFO, Bank of America: And again, here we are, it’s whatever it is October 15. So as we go through time, we’ll be able to update you more. And I think we’ll give you a sense also at Investor Day of how that plays out over the course of multiple years, because obviously we’re going to get this asset repricing over multiple years and we’re going to benefit from that.

Lee McEntire, Investor Relations, Bank of America1: Yes, of course. And then more near term, there was a comment you made about expenses being flat in next quarter versus this quarter?

Alistair Borthwick, CFO, Bank of America: Yes. I think I said we thought they’d be flattish because we anticipate the headcount is going to be flattish. And that’s just a question what happens with the revenue side?

Lee McEntire, Investor Relations, Bank of America1: The headcount would be flattish. Okay. But I wanted to get a sense as to are you thinking about how are you thinking about NII and fees on the back of that? Because the question that’s coming up is, hey, you’re guiding down for next quarter on expenses coming in flattish not coming down. But I’m wondering what’s your expectation for capital markets and other compensatory revenues?

Because I think we would like to hear the whole picture not just one piece of the income statement outlook.

Alistair Borthwick, CFO, Bank of America: Yes. So let me try to reframe. On the expense side, what I’m trying to communicate is the overall expense base for the company we expect to be kind of flattish for the fourth quarter because the headcount is flattish. We can just see that. It’s just that’s where it is and that’s the biggest part of the expense base of the company.

Now, obviously, have to watch and see what happens with revenue in the fourth quarter. We don’t know that yet. But we have no reason to believe anything other than sort of flattish kind of expense at this point for the fourth quarter. And then in terms of the net interest income, I think we tried to make sure we were clear. We’d earlier in the year thought 15.5% to 15.7%.

We were making that projection a long time ago, that was a year ago. And now that we’re three quarters through and now that the third quarter was probably a little ahead of where we hoped, we kind of feel like it’s 15.6% or higher. It’s going to be the higher end of the range is what we’re trying to communicate.

Lee McEntire, Investor Relations, Bank of America1: Okay. And the capital markets backlog, how’s that shaping up? And what does that look like for next quarter?

Alistair Borthwick, CFO, Bank of America: In terms of the investment banking outlook, I talked about that earlier. The pipeline looks good. It’s just a question of what we can execute in Q4, but it feels to us like this is a more constructive environment for investment banking than it was earlier in the year. And then in terms of the sales and trading business, obviously, have to think about the normal Q4 seasonality when you think about it relative to Q3. But it is a I’d say it remains a very constructive environment for the sales and trading business in particular.

So we feel good about that. We’re off to a good start this quarter. But obviously, it will depend on what happens with the obviously depend on what happens with the markets overall. And then just taking a big zoom out always the key for us is just we got to manage those businesses for the long term. And we’re looking forward to talking about that when we get together in November together for Investor Day.

Lee McEntire, Investor Relations, Bank of America1: Sounds great. Thanks so much. Appreciate it.

Call Moderator: We’ll take our next question from Gerard Cassidy with RBC. Your line is open.

Lee McEntire, Investor Relations, Bank of America2: Hi, Alastair. Hi, Brian.

Alistair Borthwick, CFO, Bank of America: Hi, there.

Lee McEntire, Investor Relations, Bank of America2: Alastair, you guys are talking about your consumer deposits. And when you look at your consumer deposits back in the 2019 and compared to today, obviously they’re higher. And the Fed shows the entire industry’s consumer deposits, household checking account deposits are significantly higher from pre pandemic. So that pandemic surge hasn’t left the banking system. Do you guys have any color on what you’re seeing from that behavior from pre pandemic to today?

I know you’re taking market share and you’re growing while yours are growing, but any color on why we still have such elevated levels of deposits?

Brian Moynihan, CEO, Bank of America: Gerard, so I think if you remember back in 2021 and stuff trying to have the great debate about where all this cash that was put into the economy going to flow right back out, etcetera. And if you drew a line of the growth rate leading up to 2019 over a long period of time and then saw a bubble above it, it was working it’s basically worked its way back down relative in the aggregate amount of deposits relative synchronicity to the long term growth rate. So the size economy is bigger, the notional economy is bigger. We can get economists in our company and I’m sure in your company that will have a great debate notional real economy sizes and stuff. But it’s just the economy is bigger, the amount of cash in circulation is bigger.

So therefore you expect it. Now the most important thing though is that we’ve gained share during that time in terms of core transactional. So we’re 20%, 30% more core deposit transaction accounts in our consumer business. That’s numbers of customers who are carrying instead of $6.7000 dollars in average, 9,000 in average. And at the same time, we’re probably we’ve reduced the numbers of branches because of more digitization, automation, the numbers of teammates in consumer dedicated to service, etcetera.

So it’s a great operating leverage. So even though the economy grew and everything else, the fact of the matter is those deposits that are core and the all in cost of all consumer deposits 58 basis points against the current rate environment is a big profit improvement in that consumer business. And just in the last year, saw a 30% increase and it’s still gaining the efficiency not from cost reduction as much, but cost levels against the NII improvement. As the NII comes in the company, they are beneficiary of that amount. So it’s so I’d say, I think you’re now seeing deposits grow in the industry now for at our company now for many quarters.

I think it was the mid of almost two years one point five to two years ago where we bottomed out and we’ve grown since then. And so you ought to grow with the economic growth. And if you take share, you grow a little faster. That’s the gig that we’re we don’t see any dynamic that even as they continue to adjust interest rates and stuff that you see a lot of money flowing back out of the banking system. It’s kind of already happened frankly.

Lee McEntire, Investor Relations, Bank of America2: Got it. Okay. Thank you.

Call Moderator: We’ll move next to Saul Martinez with HSBC. Your line is open.

Saul Martinez, Analyst, HSBC: Hi, good morning. Thanks for taking my question. Obviously, you’ve had pretty impressive growth in commercial loans and markets landing up 36%. If you just look at overall U. S.

Commercial overall commercial loan growth well into the double digits. You obviously have a very good track record versus your peers in terms of credit and underwriting. But that but I guess the question is what I guess what should give us confidence that you’re not compromising on risk to get that kind of the kind of growth that you’re seeing? What’s allowing you to take share and grow in an outsized way versus your peers without changes to pricing or risk assessment?

Alistair Borthwick, CFO, Bank of America: Yes. Well, remember this is not new for us. And this is all focused on our clients. That’s a core part of responsible growth. It’s got to be focused on clients.

And the clients that we’re talking about here are typically the top asset managers or the top financial institutions in the world. So that’s who we’re interested in working with here. Beyond that, we’re looking for collateral pools. We want high quality. We want diversified.

We’re looking for structures that have security, credit enhancement, performance triggers mark to market. Typically tend to be shorter duration. And then we don’t put all our eggs in one basket. We’re diversified across multiple sectors. So that can be mortgage or it can be asset based.

It can be business lending or private equity. It can be consumer assets or subscription facilities. When you add all that up, you end up with a diversified book that’s typically investment grade. It’s lower risk. And the loss content, if you look at our res credit, it’s less than a basis point.

If you look at our NCLs, it’s less than 0.1%. So by the time you have those great clients, you have good collateral, you have good structures, generally speaking attentive of the losses. And then the asset test ultimately shows up in returns for the global markets business because any losses they absorb. And over time they’ve done a good job of deploying capital while increasing ROA and return on capital. So we feel like that business has worked well.

Final thing I’ll just say is, I mean, I feel like we have differentiated capability here and that we tend to have very strong relationships with these global markets clients that we talked about. We have the structuring and the underwriting and we’ve got the excess in the form of lots of deposits and less loans where we can actually make loans to those clients to satisfy the demand. Then it’s just a question of are we getting the return for the risk? We believe that we are.

Saul Martinez, Analyst, HSBC: Okay. That’s helpful. I guess a related question. And I’d love to get your perspective on the sustainability of the results of your capital markets businesses, not just the markets business, but investment banking as well. I mean in this quarter, investment banking, these were at levels you haven’t seen since 2021.

And it feels like we really are in a sweet spot where we’re seeing a resurgent investment banking activity, a lot of optimism that this has legs. And this is also occurring in an environment where the markets businesses are performing well, not for you guys, but for a lot of folks. And I’m just curious if an environment where we do see investment banking continuing to grow over a multiyear period, is that consistent? Is that an environment where the markets businesses can continue to stay at current levels in terms of revenues because those are businesses that do generally benefit from more volatile economic and market backdrop. So I’m curious if you have a view on sort of the interplay between those two and whether markets businesses can continue to do well in an environment that is a little bit more stable, that is more suited to Investment Banking continuing to grow?

Brian Moynihan, CEO, Bank of America: I think So let’s sort that. And one of the reasons why we started a long time ago disclosing Global Markets separately as a separate operating unit because it supports the whole company including the wealth management business, including the consumer business for XFX transaction. So we disclosed it separately, but to do to show its breadth in the company, but also to show it’s less volatile than people assume it is when you’re running the way that Jim and the team have run it. So 14 quarters in a row of year over year revenue growth is a pretty sustainable record. And there might be some day that’s broken, it has been broken for three plus years.

So that’s good. And the profitability, I. The returns of business continue to go up and that has a lot to do with how they conduct the business and how they it’s a moving business not a storage business. It’s not holding a lot of risk on a given day. It’s on the lending.

It’s high quality assets underneath them, no subprime, etcetera. So that’s so we feel that it’s sustainable. And yes, it does a benefit and especially on the equity side when markets are moving around and people are trading more sure you saw that this quarter. But it overall just keeps grinding its way forward. Now when you look on the investment banking, dollars 2,000,000,000 in fees coming in the quarter, everybody expected it to be less than that it came, but you’re seeing the activity spread out geographically.

You’re seeing a lot of activity in the mid sized market in The U. S, which we are capturing through the combination of our investment banking teammates and our commercial banking teammates to cover all the markets and are out there in our middle market franchise and capturing strong market share from those customers. But I think one of the things you need to think about is that business we run a global corporate investment banking business as a consolidated as a business and that goes into global banking along with our middle market and our Business Banking business. Why that’s important to think about is with our relationship with these customers, we have their credit relationship, their transaction services relationship and the fees for that bank grew 12% year over year and their investment banking and their hedging and other types of things on top of that in the markets. And by doing all that, you actually have a more stable revenue stream attached to that business.

So whether investment banking goes up or down by $100,000,000 if you look at the global banking results, the volume of revenue is coming from the lending side and the deposit side. So it’s great to see Matthew and the team have a good quarter, but Matthew I would tell you it’s also great that the loans grew, the deposits grew year over year. The loans are solid that and then working with the middle market and the loan growth we’re seeing there. It’s holistic view of the customer and I think that’s sustainable.

Saul Martinez, Analyst, HSBC: Great. That’s very helpful. Thank

Glenn Schorr, Analyst, Evercore: you. And

Call Moderator: it does appear that there are no further questions at this time. I would now like to return the call to Brian.

Brian Moynihan, CEO, Bank of America: Thank you, operator. First, I want to thank our team here at Bank of America. A quarter like this is a salubrious setting for us to finish up 25% and head to 26%. It’s a great amount of work done by a talent team and I want to thank them for doing that. Next, I think for you as shareholders, you also saw a good quarter, good returns, good operating leverage, good growth in the core businesses, some extra kick from investment banking and else.

But I think as we started just focus on all the businesses grew their earnings, all the businesses have strong returns and they all created operating leverage by and large. So we feel very good about that as we turn to ’26. So we look forward to seeing you in few weeks at Investor Day and thank you for your time and attention.

Call Moderator: This does conclude today’s program. Thank you for your participation. You may disconnect at any time and have a wonderful afternoon.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.