Detailed Narrative
AI Integration and Productivity
Brian Moynihan highlighted the extensive use of AI-enabled capabilities across the company, with over 200,000 teammates using these tools and generating more than 400,000 prompts daily. The company has over 300 approved AI use cases, with 114 live generative AI use cases, 34 of which are fully implemented. These tools aim to enhance productivity, consistency, and client service, driving significant economic opportunities.
Balance Sheet Strength and Optimization
The balance sheet remained strong with steady assets at $3.5 trillion, supported by robust liquidity and diversified funding. The CET1 ratio was stable at 11.2%, well above the 10% minimum. Management noted ongoing balance sheet optimization efforts, particularly in paying down repo and institutional CDs, which is expected to improve net interest yield and free up capital in the second half of the year.
Deposit Franchise Advantage
Bank of America's deposit base grew to $2.02 trillion, up 2.5% year-over-year, marking the 12th consecutive quarter of average deposit growth. Noninterest-bearing deposits increased by 4%. This growth was primarily driven by Global Banking and strong client engagement, allowing the company to maintain a stable and attractive funding advantage without chasing rate-sensitive balances.
Broad-Based Loan Growth
Average loans and leases increased 8% year-over-year to $1.2 trillion, marking the ninth consecutive quarter of growth. Commercial loans led this expansion, growing 11%, with broad-based contributions from domestic and international markets, and across business banking, commercial bank, and corporate bank segments. Consumer loans also grew 3%, driven by securities-based lending and credit card balances.
Credit Quality Stability
Credit quality remained stable and consistent with strong underwriting discipline. Provision expense and net charge-offs were both $1.4 billion, largely unchanged from Q1. Consumer card charge-offs and delinquencies improved, and commercial credit remained solid, with a decline in reservable criticized commercial exposures. The portfolio is well-positioned, supported by strong client fundamentals and disciplined risk management.
Consumer Banking Performance
Consumer Banking delivered a strong quarter with net income up 10% to $3.3 billion and revenue up 5% to $11.3 billion. The segment achieved its fifth consecutive quarter of positive operating leverage and a 51% efficiency ratio. Client engagement was robust, with 162,000 net new checking accounts and card spending up 9%. Digital engagement remains a differentiator with 50 million active digital users.
Wealth Management Growth
GWIM reported record revenue of $6.9 billion (up 16%) and pretax income, with net income increasing 42% to $1.4 billion. The segment added 6,000 net new affluent households and saw client balances reach a record $4.9 trillion. Assets under management grew 17% year-over-year to $2.3 trillion, supported by $14 billion of AUM flows this quarter.
Global Markets Outperformance
Global Markets delivered an exceptional quarter with net income (ex-DVA) up 70% to $2.7 billion. Sales & Trading revenue (ex-DVA) increased 33% to $7.2 billion, with Equities delivering a record $3.6 billion and FICC achieving its strongest quarter in over a decade at $3.5 billion. This marks 17 consecutive quarters of year-over-year sales & trading revenue growth.