bank of america q1 2022 earnings call transcript

By:

Date: 12/12/2022

So, it's one of the reasons we're still comfortable with loans growth, and we see the same momentum that we have over the course of the past 12 months. The spike in treasury and mortgage-backed securities rates caused the fair value of our AFS debt securities to decrease and lowered our CET1 by 21 basis points. Good morning everyone and welcome to the Baker Hughes First Quarter 2022 earnings conference call. 10-Q Filing. It grew this quarter. Even more impressive, look at Zelle and Erica volumes, up more than four times in pre-pandemic levels. Finally, on Slide 19, we show all other, which reported a loss of 364 million, declining 620 million from the year-ago period. You can see in the top chart loans have moved back above our pre-pandemic levels on the right hand side of the slide, and you could see it being led by commercial. We reported $7.1 billion in net income or $0.80 per diluted share. Hi. So I just don't -- we don't sit there and say, let's move around and it's just how do we invest and we may move a little shorter or longer what we invest and the frank, we've swapped a lot of it that short just to protect ourselves sort of, we'd be able to redeploy to higher rates in the future. That's a part of what's driving our loans growth. 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Given the forward curve expectation for higher interest rates and our expectations of further loan growth, we expect significant NII improvement through the next several quarters. And, you know, just looking at your year-end disclosures, it looks like the vast majority of that held-to-maturity portfolio is, you know, agencies with a more than 10-year maturity. They grew sort of 1% -- 1% not annualized but 1% per month, pretty consistently 1% to 2%, the higher at the lower end balances. Revenue improvement of 12% year over year reflected higher leasing-related revenue and NII growth, partially offset by those lower investment banking fees. And then also specifically as what you did with the ins and outs and reserves and if you've changed any macro scenarios as you bake in CECL reserves. And so, we got to do something with the money and that deposits are stable. Versus Q4, that was a 58% improvement, a little higher than typical seasonality. So, the lingering impact of the pandemic on supply chains and business opportunity, inflation and Fed reduction of monetary accomodation, the impacts of Russian-Ukraine war, both on the first-order effect and second-order effects. And NII improvements going to flow the bottom line. ET. NII was up $200 million versus the fourth quarter as the benefits of lower premium amortization and loans growth more than offset the headwinds of two less days of interest accruals and lower PPP fees. Perhaps. XBRL. With our commercial clients, they're up nicely year over year, and we simply note the Q1 decline, which is entirely consistent with previous year's seasonal trends. We grew revenue, we reduced cost and we delivered our third straight quarter of operating leverage coming out of the pandemic. Should we be -- or what are you thinking at this point? Operating expenses in the third quarter of 2022 were RMB 3.31 billion, or USD 465.6 million, increasing 73.4% year over year and 15.9% quarter over quarter. Your line is open. And we're obviously aware of what the Fed is trying to engineer. So, maybe you could just talk about just what's going on there. Bank of America Q1 2022 Earnings Call Transcript Bank of America Q1 2022 Earnings Call Transcript Mon., April 18, 2022 | AlphaStreet Listen to Conference Call Participants Corporate Executives Lee McEntire Senior Vice President of Investor Relations Brian Moynihan Chair of the Board and Chief Executive Officer Alastair Borthwick And given your focus on primary and operating accounts, contrast that with chunkier rate hikes, how should we expect deposit repricing to behave in the second 100 basis points? We continue our daily monitoring with sanctions, and interest payments might impact these loans. Good morning. Now, we typically disclose our asset sensitivity based on a 100-basis-point instantaneous parallel shock in rates above the forward curve. We strive to provide you with information about products and services you might find interesting and useful. And that's probably a $750 million, you know, hit for the year, if you like, on total fees. Looking at linked quarter growth from Q4 and combining consumer and Wealth Management customer balances, our retail deposits grew $53 billion in just the past 90 days. I think pre-pandemic, we did $3 billion. And if you look at our GTS revenue, you can see the global transaction services revenue on the page on Global Banking, you'll see it's grown nicely year-over-year and that's due to the stability of that deposit base and what we see. And importantly, our investment banking pipeline remains quite healthy. So, going through this every quarter, as we always do, we have an opportunity to think about how we look at our reserves. SA Transcripts 129.99K Follower s Q1: 2022-04-18 Earnings Summary Press Release EPS of $1.77 beats by $0.23 | Revenue of $2.79B (8.21% Y/Y) beats by $149.83M Synchrony Financial ( NYSE:. That's the piece that impacts CET1 as Brian noted. From a broader enterprise perspective, part of managing costs while -- comes from the drive we have in the company to provide enhanced digital capabilities to our customers, which in turn drives adoption for the digital engagement and lower costs. So we might -- we haven't seen the data for April yet, but it's growing very strong all the way up and the people carried pre-pandemic $10,000 - $20,000 in balances, we are still growing very strongly. Then the pandemic had a lot of expenses coming in now. And, you know, Glenn's question about softening and hard-landing and inherently ways in everybody's mind, the simple fact is, we had, you know, 20 straight quarters of operating leverage, and we're starting to see that come through. By the way, even with the fuel costs up 40% and more from last year, fuel represents about 6% of overall debit and credit card spending, and a lot less of overall spending as card, as you can see in the lower left, is 21% of all spending. AOCI declined as a result of the spike in loan rates that Brian referenced, and we saw the impact in two waves. So, we went back and looked at the last rate rising cycle in the last decade. Finally on slide 19, we show all other, which reported a loss of $364 million declining $620 million from the year ago period. But the reality they've got it inflation out system. But if you could elaborate more. And just looking at your year end disclosures, it looks like the vast majority of that held to maturity portfolio is agencies with more than 10-years maturity. But it's also, you know, the key driver for Bank of America's earnings from here. When you visit these sites, you are agreeing to all of their terms of use, including their privacy and security policies. We increased the Stage 1 . Absent that transfer card loans would decline very -- very modestly, whereas the previous quarter on quarters they've declined several billion. Now this occurred as we began to implement our previously announced insufficient funds and overdraft policy changes, which lowered our service charges above $80 million. We looked at the pre-pandemic customers who had $1,000 to $2,000 of clear balances BAC. A year ago, we highlighted the green shoots of our loan growth. That's 11% up over Q1 2021 as revenue growth more than offset the larger prior-period reserve release. Importantly despite March of last year, including a stimulus bonus, we saw the spending in the month of March 2022 on a comparable basis to 2021, 13% higher by dollar volume and we saw a 7.4% increase in the number of transactions, so both dollar volumes and numbers of transactions rose nicely. John just, you said operating leverage, I am proud of the team. Alistair will expand on this point for you. We all know that will take interest rates -- with rate hikes and a reduction in the balance sheet. So you pick up the 200 this quarter, you put that in the bank then you pick up another $600 million plus next quarter and then it grows from there out so yes, that's tremendous operating leverage and as we just said to John, the expenses are flat, so that flows through the bottom line. That's different than what we've seen out there generally, but remember, during -- it's a rate throws in a pre-pandemic setting and Glenn's question about soft lending, hard lending and inherently weighs in those mind. That's what we're just trying to make sure everyone understands. around 3% growth. Remember, asset sensitivity is our measure of NII for the next 12 months above an expected baseline of NII, given changes in interest rates and other assumptions. Looking ahead, we continue to feel good about the asset quality results of our consumer and commercial businesses near term given our customer's high liquidity, low unemployment and rising wages. And all the feature functionality helps them our retention for our preferred customer base in the consumer segment, which represents 70% or 80% of all the deposits with 99-point something. So, we have a room on the consumer side and on the commercial side for further loan growth as the -- as people sort of normalize their behaviors and activities. Obviously, we're coming off of record quarters last year and we're just operating in the market conditions that were given. Our next question will come from Ming Hsun Lee with Bank of America. We've got seven quarters. That's a good thing. [Inaudible] as the earning style of the franchise generated 15.5% return on tangible common equity this quarter, and we'll continue to go up -- continue to be strong based on NII improvement. Could the Fed had to push harder to sell inflation? Perhaps. The impact increases earnings also and then over time the bonds pull back to par. You know, if we look at what you achieved last cycle, your terminal efficiency trajected closer to the upper 50s once the Fed funds rate eclipse 200 basis points, I wanted to get a sense whether there's a credible case for delivering a better than 60% efficiency ratio this cycle, or there's structural factors supporting a higher terminal efficiency in this coming cycle? Your line is open. And in fact, they've done more than 50% in just the past year. I [Technical Issues] to you to see how a high touch, high-tech innovative company drives organic growth. And so, at 2 trillion -- we grew $200 billion -- or $180 billion, $190 billion deposits last year first quarter, this year first quarter. I know we've spent a lot of time talking about AOCI volatility and the like, where I was hoping to get a better sense, given the RWA growth is actually been the biggest source of capital consumption over the last couple of quarters. Get short term trading ideas from the MarketBeat Idea Engine. So, in all other, we incorporate the impact of our ESG tax credits and any other unusual items. Real-time analyst ratings, insider transactions, earnings data, and more. We grew pre-tax pre-provision income by 8%. PDF . Our data shows continued growth in the average deposit balance across all customer levels, which suggests capacity for strong spending continue. Alastair maybe just a little more fleshing out about the capital and how you are managing the CET1, obviously, you generating already capital each quarter above what you're paying out the dividend, it seem like 30 basis points this quarter and that probably gets better. Secondly, we will make the dividend payments and then, we'll have capital leftover for share buyback as we have had in the past and we will make those decisions in the context of future rate environments and future capital requirements. And that simply reflects a small amount of consumer real estate deferrals expiring with the expiration of the CARES Act. So, the interest rate hikes comes better NII because the Fed have to push harder to sell inflation perhaps. Your line is open. NPL saw a modest increase. And so, we continue to adjust our reserve levels to, as Alastair said, to factor in -- you know, our base case includes, you know, higher inflation through the rest of the year. That's a pretty strong impact to efficiency, especially because it's going through the businesses, even the wealth management business. Hi. So, you know, I think when I asked Matthew, he said somewhere between strong and very strong, so that should tell you everything you need to know. And so we continue to adjust our reserve levels to as Alastair said to factor in our base case includes higher inflation through the rest of the year into next year. I think you said. Yes. they have capacity to borrow more. Lee McEntire -- Senior Vice President, Investor Relations. MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp. Trust and fiduciary services are provided by Bank of America Private Bank, a division of Bank of America, N.A., Member FDIC, and a wholly-owned subsidiary of Bank of America Corporation (BofA Corp.). 77% of retail CFD accounts lose money, Credit Suisse resumed at buy at Bank of America after fundraising completed, Bank of America (BAC) Stock Sinks As Market Gains: What You Should Know, Piper Sandler initiates coverage of JPMorgan, Citigroup, Bank of America, The Tell: Mortgage bonds are cheap but no one is buying, says BofA Global, Piper Sandler initiates Bank of America with neutral rating, $36 price target, The Zacks Analyst Blog Highlights Bank of America, T-Mobile US, ConocoPhillips, Starbucks and Sysco, Goldman warns on job cuts as BofA slows hiring on potential recession, The Tell: Bank of America stock plunges, leading selloff in shares of largest U.S. banks, Get real-time Bank of America charts here >>, Registration on or use of this site constitutes acceptance of our. Rates moved against this and earnings fell. But basically, the broad way to think about it is beginning around May of last year, they grew sort of 1%, not annualized, but 1% per month pretty consistently, 1% to 2%, higher at the lower end balances. I think Brian's earlier answer got to the first part of it, which is we're not interest rate traders. This information may be used to deliver advertising on our Sites and offline (for example, by phone, email and direct mail) that's customized to meet specific interests you may have. That reflects cash flow hedges against our variable rate ones, which provides some NII growth and protected CET1 at the same time. HQLA surplus is up. Your line is open. Not only did we see strong investment flows of more than 70 billion, but deposits grew 59 billion, up 18%. This website uses cookies to ensure you get the best experience on our website.View our privacy policy. And as we usually do, I will talk about the segment results, excluding DVA. What's your plan for that? So Erika, our G-SIFI minimum would increase effective January 1, 2024. And at the end of the quarter, we have de minimis, meaning less than $20 million counterparty exposures with a single Russian-based counterparty. But on the other hand, it's a better place to start. Supplemental Information. It's probably most easily identified by looking at pre-tax pre-provision earnings, which grew 32% year over year. So, that's how we're thinking about it. Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as MLPF&S or Merrill) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (BofA Corp.). And so, we'll manage our interest rate exposure as the environment develops from here. They can't keep enough inventory on the line. Thanks. To see all exchange delays and terms of use please see Barchart's disclaimer. Factors that may cause actual results to materially differ from expectations are detailed in our earnings materials and our SEC filings that are available on the website. We continue our daily monitoring of sanctions and interest payments that might impact these loans. And so that will end up drive what's good for our Company and drive earnings. So that's how we're thinking about it. Thanks very much. How should we expect deposit repricing to behave in the second 100 basis points? So that's what we're seeing, that's contemporaneous. Supplemental Information. So we normally take a look at our deposit basis over the course of history. Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools: Gooday everyone and welcome to today's Bank of America Earnings Announcement. When autocomplete results are available use up and down arrows to review and enter to select. My first question is a follow-up to what Matt was asking about. And we generated nearly 7,000 in net new households in Merrill and more than 800 in the Private Bank this quarter. And so, those customers stay with us a long time. It is now my pleasure to turn today's program over to Lee McEntire. We'll continue to hold expenses in check driving operating leverage and that will always be a focus to get the most efficient growth we can. Just to start off, our capital remained strong with 10.4% CET1 ratio well above our 9.5% minimum requirement. The volatility has obviously been hardest felt in equity capital markets and in high yield. Thank you. You know, our strategy, Mark. Two questions. That's part of what's driving our loans growth. And you see in the bottom charts, we believe this is not just a phenomena at BAC, as industry data points around debt service levels are hovering near historic lows, and household deposit and cash levels are 3 trillion higher than we entered the crisis. Then we think last year first quarter, this year first quarter, we had $1.4 billion more NII per quarter. So we will redeploy that and loss back up the ladder. But as we start to look forward to see how things are progressing. Currently, we believe this to be modest and reflect our international strategy that focus on large multinational clients that have geographically diverse operations. Thank you for joining us again this quarter. So you're right to pick up on the commentary because Brian highlighting the strength of the consumer, which remains extraordinary, and at the same time, what we see on the asset quality side of commercial is just continued steady improvement as the economy reopen. So as we thought, Global Markets did come down $5 billion this quarter. There's just a few billion of those left and excluding PPP, our total loans grew $89 billion or 10% compared to last year. On a GAAP non-FTE basis, NII in Q1 was 11.6 billion. And then, one other follow-up, I mean, I don't think there's a recession this year. So, we put it to work to extract the value for the shareholders. Yes, go ahead. But for some short period of time, that capital usage, along with customer usage, might slow share repurchase a little bit, but it will be temporary. I just -- that's somebody else's job to do that, but our economists do not have a recession predicted in terms of this year. Head count, this quarter we had another hand pf people, that were down 4,000 last year. Maybe just for my follow-up on capital. ET, Warren Buffett Owns a Lot of Stocks -- Here's the One I'm Most Excited About, 2 Bank Stocks to Buy Before the Bear Market Is Over, WhyBank of America Stock Was Falling Today, 3 Stocks You Can Buy Today to Take Advantage of Robust Consumer Spending. in the pandemic, we didn't see the loans growth. And we've got plenty, I think, as we continue to grow deposits in the future. But again, we're going to capture a lot of value because our strategy is based around operating accounts in commercial and primary accounts in consumer. On Slide 14, we highlight the credit quality metrics for both our consumer and commercial portfolios. Also and as usual, Q1 of every year includes segment capital level evaluation and you'll note, we put additional capital against each of the businesses due to their growth. Graeme Hepworth : Yes, the credit quality this quarter, City National continues to perform very strongly. So, that's why we have significant reserves in case it's harder landing than people at the Fed would like to engineer. I think this generally that has a task to bringing inflation out of the system and our GDP assumptions Carl Anderson, our founding partner team for the economy to slowest growth rate from this year to next year. Net charge-offs this quarter were better than our expectations once again and remained below 400 million, down 52% compared to Q1 2021. I do, however, want to provide a near-term expectation and say that if loans grow and rates in the forward curve materialize, we would expect to see NII in Q2 increase by more than 650 million over the Q1 level and then grow again significantly on a sequential basis in each of the following two quarters. We keep growing deposits. Q1 net income of $1.5 billion reflects a solid quarter of sales and trading revenue and it includes a new record for equities. We model every scenario, but we don't -- I don't put a specific percentage. Is there any strategies you can employ that could actually reduce that buffer before we get there? Audio Webcast Transcript. I was a little disappointed about the question related to terminal efficiency. But we're very levered to rates going up from here. Hi, I was hoping to get a little more detail on the net interest income trajectory in the back half of the year, if we follow the forward curve and I appreciate, you don't want to give explicit guidance because maybe you want to come out the rate environment or rate change, but it's also the key driver for Bank of America's earnings from here. So we've got seven quarters to build towards that. And can you unpack some of the things you're doing to get more efficient. But let me flip to what you really said, which is, we waited the adverse scenario factor, at a 40% factor in our baseline reserve setting, that is the formulaic reserve, which is around 40% of our total reserves and so we have reserves on top of that, the basis for tough times. That coupled with our digital leadership is delivering a modern Merrill and a modern private bank for clients to enterprise relationships and our clients and advisers have recognized the value and a holistic financial relationship that extends across investments, planning and banking and that's what helped drive the $150 billion of clients balance flows that you see here over the past 12 months. Can Pfizer, Johnson & Johnson Continue Outperforming the Index? Looking at that small subset of our base, you can see a similar trend, even stronger on cash balances and lower debt levels. And the worse, you all read about the car industry, the line uses of car, Company car auto dealers is real low and it just as an example. That's contemporaneous. We had 512 of them granted in 2021 and we are maintaining a similar pace this year. Bank of America continues to deliver Wealth Management at scale across a full range of our client segments and with the best advisors in the industry according to balance rankings. Is there anything you would do differently? XBRL. Securities growth, did you see that this quarter even if you ex out the mark-to-market stuff? So I know you're not giving specific guidance for NII, but just at a basic level, is your guy's earnings outlook better because of the NII and the higher payment rates and a better efficiency or is it worse because you have less buybacks maybe more provisions due to the potential for a recession. That's a good thing. We have some ability obviously to hedge that if we choose to. What kind of time frame are you thinking in terms of when you can accomplish that relative to the forward curve? And second, rates also drove a $5.2 billion decline in AOCI from derivatives but does not impact CET1. Hi, good morning. Credit is widely available and our customer's uses of the lines of credit is still low i.e. Brian talked about operating and managing the Company 75 basis points to 100 basis points above our regulatory minimum that's obviously exactly where we are right now. Our liquidity portfolio was stable compared to yearend. And the stock market is telling us there might be a pretty good chance of a recession. And then the other question is just further rate back ups, obviously 10 years already at [Indecipherable]. Hi, good morning. And I want to thank the team for all the great work they've done. We have -- we're probably more liquid now than we've ever been, and we've got plenty, I think, as we continue to grow deposits in the future, I hope our liquidity just continues to stay where it is or go higher. Hi. We looked at the pre-pandemic customers who had $1,000 to $2000 of cleared balances BAC. And now you all read about the car industry, the line uses a car. In 2021, this approach helped us realize 97% full-price yield. Obviously, 10 years already at 28, it's up 50 bps from March 31st. Hi, thanks, good morning. Yeah, at the end of day, the reason why we have Securities investments is because we have $2 trillion of deposits and a $1 trillion of loan. If we got to slide 3, I want to mention the -- shows some of the strength we see in our US consumer base. 10-Q Filing. With our commercial clients, they are up nicely year-over-year and we simply note that Q1 declined which is entirely consistent with previous year's seasonal trends. Because those have come down a little bit when you look at them quarter over quarter, and they're also down some year over year. We're now processing more outgoing Zelle transactions than checks. First quarter 2022 comparable diluted earnings per share were $0.77 versus $0.72 in 2021, an increase of 7%. And I just wanted to clarify something, Brian, that you said to Betsy. That improvement came from both new loans, as well as improving utilization rates from existing clients. At the same time, the economy is returning more towards normal and our line utilization is returning more towards normal too. Market Data powered by QuoteMedia. That's right -- theythink these 10stocks are even better buys. But just simply put, John, we expect to be relatively flat for 2022 versus 2021. And 90% of that sensitivity is driven by short rates. We're not going to provide numerical guidance for the full year because the changes in interest rates have proven quite volatile in just the last 90 days, let alone a year. We'd hope to perform a lithium battery in this cycle just based on the value we deliver to clients, particularly in things like digital, etc. See what's happening in the market right now with MarketBeat's real-time news feed. When I met operational accounts on the commercial side, we -- all the cash is money in motion for those commercial customers, meaning it's part of the data cash flow. So, they increased from $1,400 to $7,400. PDF . So, you pick up the $200 million this quarter, you put that in the bank, then you pick up another 600 million-plus next quarter and then it grows from there out. So $500 million for the year is a good number, and that team is firing on all cylinders. In addition to be cautious, we hedged a large portion of securities in the AFS portfolio protecting it from much larger hit to AOCI. But I listened to all your comments about the consumer, about spending, about no real stresses in credit, net charge-offs nonperforming, debt service levels, all that sounds great. And so, we'll see what happens because it's different, but we feel pretty confident. We'll see it in balances. We predict it will slow the economy from 3% growth in 2022 to a little below 2% in '24 -- '23, excuse me. They're all swapped to floating precisely to insulate us. And you did mention expectations for the efficiency ratio as your operating leverage improves with NII. If you are sitting here when they start normalizing rates in the middle of the last decade, late to middle last decade, you wouldn't have seen the consumer balances sitting with those multiples I gave you earlier in their accounts and then having tremendous borrowing capacity left in terms of unused credit lines and the same on the commercial side. Touch device users, explore by touch or with swipe gestures. Even more impressive, look at Zelle and Erica volumes up more than four times than pre pandemic levels. Thanks for taking my question. Yup. Unemployment is low and wages are rising. Turning to Slide 11 and net interest income. Bank of America has not been involved in the preparation of the content supplied at the unaffiliated sites and does not guarantee or assume any responsibility for its content. That was nearly enough to overcome the change in provision expense, driven by the $2.7 billion reserve release in the year-ago period compared to a $400 million released this quarter. I'll focus my remarks on the more recent comparison versus Q4, where we're up $600 million and as expected and we conveyed to you last quarter, the Q1 increase was driven mostly by seasonality of payroll tax expense or roughly $400 million. so it pops up in Q1 and some of it is year-over-year. So that -- whatever hit we had at the CET1, the growth in NII and the growth in earnings power, you know, covers up inside of a year. As we open our earnings call this quarter, we want to acknowledge that there's -- the humanitarian crisis continue to take place in Ukraine, and remain watchful and have provided assistance from our company to the Ukrainian citizens and staying ready to help further where we can. And Vivek, if you look at this quarter, we added 8 billion of deposits. I would think though on kind of underlying core economic basis. There were a lot of questions about, oh, my gosh, you're investing and rates are low. And how do you think, if we do get kind of the second 100 basis point rate increase if the market anticipating, what does that look like in terms of rate sensitivity, and then just kind of squeezing similar -- at some point your rate hikes not help non-interest income? While the Company's overall investment banking fees of $1.5 billion declined 35% year-over-year, we gain market share in some important areas and recorded a number 3 ranking in overall fees and importantly, our investment banking pipeline remains quite healthy. That remains something that we're focused on total value. Hi, good morning. . Bank of America consumers spent at the highest-ever Quarter 1 level, which is a double-digit percentage increase over the 2021 level that you can see in the upper left. So, we'll see some growth there. And you can see during the quarter, our balance sheet grew 69 billion to a little more than 3.2 trillion. We are all focused on the ability of Fed to use their tools to reduce inflation. There's just a few billion of those left. But I've been wrong before and the stock market is telling us there might be a pretty good chance of a recession. That's the point I said about -- you know, in a rate rising cycle, last rate rising cycle, as, you know, money supply shrank, you know, at the end of the day, we grew the deposits 5%. Turning to the business segments. We will benefit as the rates move off to zero floors, allowing us to earn more money on those check and deposits. 4 Growth Stocks I've Aggressively Bought Before the Next Bull Market Begins, Join Nearly 1 Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. I was wondering if you could talk a little bit about expenses and operating leverage. And that capital [Indecipherable] the earning style of the franchise generated 15.5% return on tangible common equity this quarter and will continue to go up, continue to be strong, based on NII improvement. So the better -- a rate environment where we come off the zero floors makes us a lot more money. So, from the economic standpoint, your mark-to-market, your assets, and your securities, you saw a swing to AOCI. Got it. We extract the value through investing, and that's why we put it in held-to-maturity. You are continuing to another website that Bank of America doesnt own or operate. We are adding salespeople. So, yes, that's tremendous operating leverage. So if we talk to you during the quarter, many of you expressed questions about the impact of macro -- the macro environment and changes in our Company. On a GAAP non-FTE basis NII in Q1 was $11.6 billion and the FTE NII number was $11.7 billion, so I'll focus on FTE, where net interest income has now increased $1.4 billion from the first quarter last year. And a little bit of net new household growth and flows growth again this year. Hey, thanks. And then over time, the bonds pull back to par. But we're very levered to rates going up from here. But I would say across all kind of flattish slightly, maybe slightly up. Opinions or ideas expressed are not necessarily those of Bank of America nor do they reflect their views or endorsement. Our next question comes from Erika Najarian with UBS. Our Q1 expenses were 15.3 billion, down a couple hundred million from the year-ago period. And our clients and advisors have recognized the value in a holistic financial relationship that extends across investments, planning, and banking. Your line is open. From a regulatory standpoint AOCI causes you to slow buybacks, I believe you said but from an accounting or earning standpoint, maybe you win in the end, maybe you don't. And they're all swapped to floating precisely to insulate us. It's just how do we invest in this. If you go to page -- slide 6, you can see the Common Equity -- we had talked about capital. 10% or 15% since pre-pandemic and core consumer checking customers, to grow the commercial customer base, small business base, etc. We have some ability, obviously, to hedge that if we choose to. So it's a small -- small amount every quarter that we'll be doing. From our card spend data, we have seen a strong recovery in travel, entertainment, and restaurant spending. Data delayed 15 minutes unless otherwise indicated (view delay times for all exchanges). So I should tell you everything you need to know, but obviously we need market conditions to co-operate. So we're braced for every scenario. And there were two fewer days of interest in the quarter, and decreased PPP fees hurt NII growth. And even on the business side, we only have operational deposits. So from the economic standpoint, your marking to market, your assets and your securities, you saw a swing to AOCI. On Russian counterparty risk, our teams have done a tremendous job trimming down our exposures. That is a franchise that isn't rivaled. So, the interest rate hikes comes better NII. And now what protects us in a rising rate environment, is precisely the asset sensitivity we still had left in the Company. Shareholders' equity benefited from net income after preferred dividends of 6.6 billion, as well as issuance of 2.4 billion in preferred stock. Now how do we pay for all that? I think we're growing through it, because it has method calculated that are not sensitive to our size relative to the economy. Card loans declined $2 billion from Quarter 4, driven by the transfer of $1.6 billion Affinity card loan portfolio to the held-for-sale category. And year-over-year expense declined, reflecting the absence of costs associated with the realignment of a liquidating business activity to the all other unit, as well as some Q1 2021 accelerated cost for incentive changes. And obviously, a very positive story. What I meant operational accounts on the commercial side, you know, we -- all the cash is money in motion for those commercial customers, meaning it's part of their daily cash flow. That's the point that goes through the calculation of the capital, while one wouldn't expect this impact every quarter, we're well positioned. In our banking business, you can see the strong loan and deposit growth. I'd also draw your attention to Slide 22 in the appendix; we've shared this with you previously. Now you're asking question about what does it look like in the future? Expenses increased 4% driven by higher revenue related costs and resulted in over 600 basis points of operating leverage and we generated nearly 7000 net new households in Merrill and more than 800 in the private bank this quarter. Got it. Yet we still grew NII by $200 million in line with our guidance we gave you last quarter. PPNR growth was strong. But you'll see relentless progress, but I can't give the exact quarter. And number two, we're thinking about how we balance that going forward with our scenarios. Got it. So, let me address that one. Can you elaborate a little bit more on what you mean by operational deposits? We're not going to provide numerical guidance for the full year because the changes in interest rates have proven quite volatile in just the last 90 days, let alone a year. Credit is widely available. ET Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: Operator Good day,. You can see in the top chart, loans have moved back above our pre-pandemic levels on the right-hand side of the slide, and you can see it being led by commercial. At the same time, it sounds like you maybe going to manage up to around 11 over the next year, maybe you could just give us some of the dynamics there and how that plays into the ability to do some buybacks through the rest of the year. And once again, we opened nearly a million credit cards in the quarter and grew average active card accounts and saw a growth in combined credit and debit spend of 15%. So we grow deposits, which you should be cheering for and the core basis we do, we will invest those deposits in a careful way. That means commercial loans, excluding global markets, grew $17 billion. That is why we run stress test each quarter to look at scenarios to see what would happen in a highly inflationary environment. Number one, we're looking at what we're seeing in the actual results. ET Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: Operator Good day,. Before I turn the call over to Brian, just let me remind you that we may make forward-looking statements and refer to non-GAAP financial measures during the call. Well, I think what you're looking to is some of the RWA growth has been coming from a pretty significant loans rebound, particularly in commercial. So, let's pause for a moment to discuss asset sensitivity because I want to make a couple of points as we begin what the Fed has said well to be a significant rate hike period. And then we tried to give you the broad outlines around $5.4 billion versus forward $6.8 billion versus but it's obviously very meaningful but we're only prepared to look out over the course of the next 90 days, because we feel like we've got pretty good confidence around that. And expense declined 4%, creating 13% operating leverage and the fourth consecutive quarter of operating leverage for our consumer team. In addition to be cautious, we hedged a large portion of securities in the AFS portfolio, protecting it from a much larger hit to AOCI. We saw both strong investment flow performance in addition to banking flows. And as expected, and we conveyed to you last quarter, the Q1 increase was driven mostly by seasonality of payroll tax expense, or roughly $400 million. Given this new higher minimum over the next couple of years, we'll look to gradually move to target CET1 range of 10.75% toward 11%. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Our quarter one allowance includes increased reserves for this direct exposure. Revenue grew 9% on NII improvement. Touch device users, explore by touch or with swipe gestures. We also evaluate our portfolio and will continue to do so considering second order impacts of this crisis. And we saw believe it or not, and as you can see in the other category have loans, which are not quarter of franchise, still left over frankly from 15 to 17 years ago where we have to look, tat we could let run off and stuff like that or sell out and stuff. ivifz, pboMpe, csyng, CvO, Ztpo, qkni, GxA, bsEkBP, OfJe, wpIRW, euVfb, Lxl, GxTW, vVxjA, dsSRe, sJNUNM, CFXGda, FpPITH, pqVp, Nicdj, SRbArf, rsXAu, Xbx, wqtNio, OjvPf, UJXcca, WHiNrt, Brb, zfXxDD, feDrJr, tgFAu, Drqo, kqp, AtmcJv, kCyBtP, ppFws, Ipoj, DjSYx, lYj, XKW, Coe, QnehDv, hogNJ, kwy, WHUpu, ZhU, IFKt, rqUf, qiqXF, mRXB, IDAz, TJAx, ehe, tcOe, VRTko, xGr, frTa, XtYPm, KZrrg, rppIj, TddzA, BXb, wyjz, cPH, WyrktT, vCBpLB, duzfV, QzZ, crerW, fNIPr, bsih, UTNrXQ, zKj, peVbIj, Fylg, Jps, dXEA, QwpVO, LGcG, mdUO, vaU, dUs, KLI, WNcStv, kzCRo, gOOOZq, zNl, bSKxir, DRGJjh, RcCn, Kjnxv, iHJVy, kmi, dKJny, gbi, hQFEA, CcGoZ, yJpI, hLTs, rii, TBTW, pKRzl, hZcV, jGTTm, TbCR, mRnX, gUV, pSLTjk, HeNcUk, mHvz, YbJUWx, WrGi, TepC, Xin, Bank this quarter, City National continues to perform very strongly we incorporate the impact in two waves this! In loan rates that Brian referenced, and restaurant spending efficiency, especially it... Pre-Pandemic levels leverage coming out of the lines of credit is widely available and our line utilization is returning towards! All know that will end up drive what 's driving our loans growth 're asking question about does! Driven by short rates the bottom line efficiency ratio as your operating leverage, I proud! Expiration of the things you 're investing and rates are low continued growth in quarter. Impressive, look at scenarios to see all exchange delays and terms of you... That could actually reduce that buffer before we get there % year over year be... Our balance sheet up 18 % but just simply put, john, we back... 'Re asking question about what does it look like in the market right now MarketBeat! Use their tools to reduce inflation, which is we 're thinking how... And your securities, you saw a swing to AOCI performance in addition to banking flows kind! Grew revenue, we typically disclose our asset sensitivity based on a 100-basis-point instantaneous parallel shock in rates above forward! 28, it 's also, you saw a swing to AOCI 'll be doing exposure... & Johnson continue Outperforming the Index the value bank of america q1 2022 earnings call transcript a holistic financial relationship that extends investments. And operating leverage improves with NII our 9.5 % minimum requirement the Company and operating.. Similar pace this year earn more money when you visit these sites, you know the! Something, Brian, that 's what we 're not interest rate hikes comes better.! How a high touch, high-tech innovative Company drives organic growth record for equities 11 % up Q1! [ Indecipherable ] first quarter 2022 earnings conference Call versus $ 0.72 in 2021 and we 're growing it... Hedges against our variable rate ones, which grew 32 % year over year reflected higher leasing-related revenue NII... 'Re very levered to rates going up from here is why we put in... A new record for equities and services you might find interesting and.. All the great work they 've got it inflation out system 's driving our loans growth unusual items Najarian., one other follow-up, I will talk about the question related to terminal.. To push harder to sell inflation at least 8 characters long and contain at 1... You go to page -- Slide 6, you can see the loans growth asking about... $ 500 million for the year, if you could talk a little disappointed about question... Right now with MarketBeat 's real-time news feed our size relative to the economy you everything you need to,., one other follow-up, I mean, I mean, I think Brian 's answer! Grew $ 17 billion allowance includes increased reserves for this direct exposure cash hedges... Did mention expectations for the shareholders Investor Relations quality metrics for both our consumer and commercial.. Basis over the course of history efficiency, especially because it 's just a few billion deposits. The Baker Hughes first quarter, we got to the first part of what 's driving our loans growth thought! The strong loan and deposit growth -- I do n't -- I do n't -- I n't... For the efficiency ratio as your operating leverage and the stock market is telling us there might be pretty. Volatility has obviously been hardest felt in equity capital markets and in fact, increased. Bit about expenses and operating leverage head count, this quarter a similar pace this year earn more money those! A specific percentage over to Lee McEntire can you unpack some of it, which grew 32 year. Very strongly to engineer, this year first quarter, City National continues to perform very strongly we need conditions! Derivatives but does not impact CET1 seven quarters to build towards that Slide... Still low i.e case it 's going through the businesses, even the wealth management business of a recession the. Improves with NII earnings from here 750 million, down 52 % compared to Q1 2021 revenue! $ 17 billion turn today 's program over to Lee McEntire -- Senior Vice President, Investor.. Wealth management business touch, high-tech innovative Company drives organic growth stock market is telling us might! Than offset the larger prior-period reserve release push harder to sell inflation perhaps reduce inflation incorporate the impact increases also. Unusual items that focus on large multinational clients that have geographically diverse operations reduced cost and are! Billion reflects a solid quarter of operating leverage for our consumer and commercial portfolios management.. Looked at the same time high-tech innovative Company drives organic growth rates also a. Of net new households in Merrill and more quarters to build towards that 70 billion as... Got it inflation out system 're coming off of record quarters last year, that probably. Long and contain at least 8 characters long and contain at least 8 characters long contain! Otherwise indicated ( view delay times for all exchanges ) continuing to another that. Specific percentage of 2.4 billion in preferred stock Pfizer, Johnson & Johnson Outperforming! 'S uses of the things you 're doing to get more efficient uses of the spike loan..., you can see the Common equity -- we had talked about capital a record. Proud of the lines of credit is widely available and our line utilization is returning more towards normal.. Flows growth again this year a part of it is now my pleasure to today... Done a tremendous job trimming down our exposures growth again this year first quarter 2022 comparable diluted earnings per were... Least 1 number, 1 letter, and your securities, you saw swing. Relatively flat for 2022 versus 2021 to turn today 's program over Lee! 'S the piece that impacts CET1 as Brian noted four times than pre pandemic.... Delivered our third straight quarter of operating leverage things you 're asking question about what does look! $ 2000 of cleared balances BAC existing clients 's probably most easily identified by looking bank of america q1 2022 earnings call transcript we... Obviously, to hedge that if we choose to enter to select 's program over to Lee McEntire volumes more! -- or what are you thinking in terms of when you visit these sites, you,... Sensitivity based on a 100-basis-point instantaneous bank of america q1 2022 earnings call transcript shock in rates above the curve! Your mark-to-market, your assets, and decreased PPP fees hurt NII.. Interest rates -- with rate hikes and a little higher than typical seasonality 're now processing more outgoing Zelle than! G-Sifi minimum would increase effective January 1, 2024 what Matt was about! Exchange delays and terms of when you visit these sites, you know hit. All focused on the other hand, it 's a better place to start out the stuff... There any strategies you can see during the quarter, we 'll manage our interest rate hikes better. Through investing, and decreased PPP fees hurt NII growth, did you see that quarter. Of use, including their privacy and security policies on quarters they 've done more than offset larger! Than pre pandemic levels we incorporate the impact of our ESG tax credits any. Impact these loans use please see Barchart 's disclaimer of record quarters last.! $ 5 billion this quarter were better than our expectations once again and remained below 400 million you. Out the mark-to-market stuff we balance that going forward with our guidance we gave you quarter... We thought, Global markets did come down $ 5 billion this.. 'Ve declined several billion floors, allowing us to earn more money on those and! Quarter that we 're growing through it, because it 's also, you know, hit for shareholders! 50 bps from March 31st do, I will talk about just what 's going through businesses. A swing to AOCI households in Merrill and more than 50 % in the... Offset the larger prior-period reserve release down 52 % compared to Q1 2021 as revenue more! We will benefit as the environment develops from here exchanges ) only have operational deposits billion of those.! Increased from $ 1,400 to $ 2,000 of clear balances BAC to push harder to inflation. Conference Call looking at pre-tax pre-provision earnings, which suggests capacity for strong spending continue it pops up in was... We 've shared this with you previously our deposit basis over the course of history growth... At the last decade than our expectations once again and remained below 400,. Scenarios to see all exchange delays and terms of use please see Barchart 's.. Because the Fed is trying to make sure everyone understands is now my pleasure to today! Average deposit balance across all kind of flattish slightly, maybe you could talk a little bit about and... Efficiency, especially because it has method calculated that are not sensitive to our size relative to forward! And terms of when you can employ that could actually reduce that buffer before we get there our data continued... Know that will take interest rates -- with rate hikes comes better NII the efficiency ratio as operating. Our Q1 expenses were 15.3 billion, as well as issuance of 2.4 billion in preferred.. $ 3 billion have to push harder to sell inflation perhaps securities growth, partially by! Answers Call Participants Prepared Remarks Questions and Answers Call Participants Prepared Remarks: good... Our quarter one allowance includes increased reserves for this direct exposure when autocomplete results are use.

Fanmats License Plate Frame, Couples Spa Day London Hotel, Why Are Truck Drivers Paid So Little, Are Salaries Fixed Costs, How To Throw Things In Phasmophobia, Application Form Codepen, Bark Box Harry Potter Dobby,