Bank of America Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : Hey, good morning. I guess I'll ask the NII question, Alastair. You talked about still feel comfortable troughing in the second quarter poised to grow. So can you maybe give us a little bit more on -- based on the forward curve, any kind of rough thinking on how the trajectory from here beyond 4Q? And what kind of growth you may be thinking about in '25? Just any kind of bigger than a breadbox conversation would be helpful.

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : Okay. That's helpful. And maybe just a follow-up on the deposit question. You guys had really strong growth in net new checking accounts, but consumer deposits still shrinking a little bit. Do you see any change in behavior since the rate cuts? Or how are you thinking about consumer deposit growth and wealth too? I guess we're seeing commercial growth, but sort of those other pieces on the retail side that have yet to sort of inflect. How are you thinking about that?

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : Okay. Thanks.

Question: Betsy Graseck - Morgan Stanley - Analyst : Hi, good morning.

Question: Betsy Graseck - Morgan Stanley - Analyst : Just to follow up on the last thread of questions. Two things, one, the deposits. How much do you feel the rate environment has impacted you in terms of the deposit growth that you've generated here and the degree of shrinkage rate that you've seen in some of the businesses? Is it rate driven, do you think?

Question: Betsy Graseck - Morgan Stanley - Analyst : Right. And I know last quarter, we were talking a lot about the sweeps and that whole pricing dynamic. Anything this quarter to say about that reflecting on how you indicated in the slide. You're at [313] it came down 1 basis point. I mean it's like de minimis, right? So just the underlying question here is, are we past this whole sweep thing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2024 / 12:30PM, BAC.N - Q3 2024 Bank of America Corp Earnings Call

Question: Betsy Graseck - Morgan Stanley - Analyst : Okay. And then the other question I had just was on the global banking. Alastair, you mentioned that corporate loan demand picked up late in the quarter. Maybe you could give us some color on what's driving that? Is that mainly a function of the M&A picking up and the legs that you see to that demand would be really helpful to understand. Thanks so much.

Question: Betsy Graseck - Morgan Stanley - Analyst : Okay, perfect. Thanks so much.

Question: Glenn Schorr - EVERCORE ISI - Analyst : Hi, thank you. One quickie follow-up on the NII front. I'm just curious, current duration of the securities portfolio and maybe it's fixed and floating mix split and how you're thinking about that short duration as the forward curve starts to play out? Thanks.

Question: Glenn Schorr - EVERCORE ISI - Analyst : Yeah. Good color. I appreciate it. Wanted to maybe get a little bit more color in the opening remarks, you mentioned the tenth straight quarter of

Question: Glenn Schorr - EVERCORE ISI - Analyst : Great. Thanks for all that.

Question: Matt O'Connor - Deutsche Bank - Analyst : I was wondering if you could talk about the outlook for share buybacks. You did $3.5 million this quarter, obviously, generate a lot of capital has excess capital and sort of the outlook for loan growth is for some, but not a ton so. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2024 / 12:30PM, BAC.N - Q3 2024 Bank of America Corp Earnings Call

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay. And then just a different topic. You guys have talked about this concept of the normalized net interest margin of about 2.3%, now a couple of few years. Any updates on the timing of that? And then I think a lot of that is being driven by the fixed rate asset repricing. But how does lower rates impact there. Can you reach that level with the current (inaudible), for example? Thank you.

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay. Thank you.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Hi. I guess I'm asking the same question each quarter, but it's because the efficiency ratio seems to be getting worse. So reconciling slide 4 with slide 10, once again, slide 4 is your digital adoption slide, which shows 75% to 90% adoption in all of your lines of business and the trends are all REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2024 / 12:30PM, BAC.N - Q3 2024 Bank of America Corp Earnings Call getting better. So much more of a digital company. And then if we look at slide 10 and your efficiency ratio is 65% versus 64% last quarter versus 63% a year ago with non-comp expense up this quarter. So when do we get back to those days when we count the number of quarters of consecutive positive operating leverage and kind of what's the disconnect here?

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : And when do you think the NII shining through will help that inflection? Is this a fourth quarter event? Is it next year? Can you give us a sneak preview for next year on what you're thinking just because it's been a little bit of a slog admittedly with the headwind from NII.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Okay. Thank you.

Question: Vivek Juneja - JPMorgan - Analyst : Hi. Thanks. Alastair, I just wanted to go through the waterfall slide you had in the second quarter deck on NII. Obviously, you've got the day count, and you've talked about the (inaudible) hedge benefit coming on. Can you talk through the other pieces that you had on that slide on the slide was not this quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 15, 2024 / 12:30PM, BAC.N - Q3 2024 Bank of America Corp Earnings Call

Question: Vivek Juneja - JPMorgan - Analyst : And Alastair, what about the other two pieces? So you have $225 million negative impact from rate cuts, obviously, more there and at the Global Markets NII. Any color on those two components?

Question: Vivek Juneja - JPMorgan - Analyst : Great. Thank you.

Question: Sharon Leung - Wolfe Research - Analyst : Hi. I'm calling in for Steven Chubak. Just on the security side. I know last quarter, you had laid out the repricing tailwind of about 300 basis points on securities, a little bit less on the loan side. Can you just give us an update on where those figures sit today?

Question: Sharon Leung - Wolfe Research - Analyst : Perfect. And then just another quick follow-up on the securities portfolio. I know you guys are seeing some repricing tailwinds there, but have you ever given any thought on like doing a bigger repositioning action just because the market seems to be responding favorably to some similar actions of some of your peers?

Question: Sharon Leung - Wolfe Research - Analyst : Okay. Perfect. Thank you so much.

Question: Erika Najarian - UBS Equities - Analyst : Hi and good morning. Appreciate that you want to wait until January, Alastair, to give us NII update, given how much is changing or how much has been changing in the curve. So maybe I'm going to ask this this way. You've talked about hedges in the past in terms of the sensitivity of your floating rate loans, specifically in commercial. As we think about forecasting for whatever rate curve turns out and you think about your floating rate loans ex card, should we assume a similar sensitivity or on the way down or on the way up, excluding (inaudible) or will the hedges essentially give you some floor in that your sensitivity to repricing going forward, again, as (inaudible) is not as significant as it was on the way up.

Question: Erika Najarian - UBS Equities - Analyst : And my follow-up question is, clearly, you have one of the best views on deposit behavior in the US. And it's been so long since we've seen a neutral rate that's not zero. So I guess a two-part question. The first is, should we similarly assume the same ability to recapture on deposit repricing on the way down as it was on the way up in terms of the same deposit beta? And as we think about 2025, it may have better loan growth, where do you think if we -- if our neutral rate is [2.75, 3%] where does Bank of America's natural deposit costs fall relative to that?

Question: Erika Najarian - UBS Equities - Analyst : That was super helpful, guys. Thank you.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Thank you. I apologize for missing that earlier queue. (multiple speakers) Alastair, you touched on the Basel in one of your comments regarding how your good position from your capital standpoint from the original proposal. Can you give us any color on what you guys have seen from that presentation that Vice Chair (inaudible) gave earlier in the quarter, what your views are, where you might come in. I think they said there was an average increase of capital for the group of about 9% and how you might stack up against that?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : I see. And Brian, do you think that could step up your activity of returning more capital as it comes in better than expected, you would take that as an opportunity maybe to return more capital to shareholders?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Great. And then just as a follow-up, you guys have been building out your, obviously, branch banking system throughout the country in markets in which don't have a big presence. Can you just give us an update on how that is progressing? And what are you seeing that makes you -- because you've got great consumer numbers, you got great read on your customers. What really makes you guys excited that this is really the way to go, a combination of the digital and these branches?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Very good. Appreciate the colors always. Thank you.