Bank of America Q2 2016 Earnings Calls Notes

Bank of America Q2 2016 Earnings Calls Notes

Net interest income shows stable growth despite low interest rates

“in summary, adjusted for market-related changes in both last year’s second quarter and this year’s second quarter, we grew NII by 400 million or 4% year-over-year. And that took place while the 10-year Treasury yield fell 86 basis points from last year on a spot basis. Going forward in a stable interest rate environment, we believe we can maintain NII around the second quarter 2016 level based on the current loan and deposit growth we see. And if rates rise, we would expect NII to grow.” Brian Moynihan – Chairman and Chief Executive Officer


Investment banking and sales and trading segments are not in need of change

“question is often asked how we need to change this business, especially the FICC area as many of our customers have. I want to hit this head on. First of all, fixed income a good business for us here at Bank of America. It is a business which benefits not only by its core activities but by being coupled with our massive global banking franchise that has leadership positions across the globe. Combined together, they generate a pretty steady billion dollars or so of quarterly investment banking fees.” Brian Moynihan – Chairman and Chief Executive Officer


Management is focused on reducing expenses

In the trailing four quarters the total expense base was $56.3 billion. As we look out from the second – the third quarter of 2016 through the next six quarters into 2018, we believe that with our SIM efforts and the continued work we’re doing across the board on expenses, we’re targeting an annual expense number of around $53 billion in total expenses for the year 2018. Brian Moynihan – Chairman and Chief Executive Officer


And on restructuring operations

“I want to point out another important milestone for our company in quarter. This quarter we changed our reporting to eliminate the legacy assets in the servicing segment. This completes transformation.” Brian Moynihan – Chairman and Chief Executive Officer


Credit performance improves and BAC reduces exposure to energy

“the question we often get is, is credit deteriorating? As you can see, we remain very pleased with both consumer and commercial credit performance. Not only have net charge-offs not gotten worse, but they have improved in the most recent quarter moving back below $1 billion. Provision expense is and will remain roughly equivalent to net charge-offs. Even our energy portfolio we have seen lower exposures improve losses.” Paul Donofrio – Chief Financial Officer


Management believes BAC can perform in current economic conditions

While growth concerns persist in many countries, the U.S. economy continues to steadily improve, albeit at a less than optimum pace. The diversity and strength of our franchise makes us more relevant to clients and customers during times such as these, and you can see that in our results. Paul Donofrio – Chief Financial Officer