Bank Of America Corp (BAC) September 23, 2026 Conference Transcript

We good to go Good afternoon everyone. Thank you. Thank you for being with us today Jim Demar will be with us today this afternoon. Thank you for coming to London. Thank you. You're part of the your co-president of Bank of America Part of the member of the company executive management team. Yes Well, thank you for the conference first. This is this is yours Great turnout.

Thanks, everybody, for attending. Beautiful hotel.

Great hotel, lots of clients, amazing corporates today with us. So thank you for that. Well, thank you, everyone. We'll go through a couple of questions, if that's OK. If we have time at the end, we'll open for Q&A in the room. Let's start maybe with the macro backdrop. We have 70 million clients globally. We have a unique perspective on what customers do, businesses, investors, so what are you seeing from those clients today and what is that telling you about the health of, of course, the US economy but also the global one?

Sure, I think in addition to the level set because we have a lot of folks here that aren't in the US and maybe don't have as much of a perspective on what our franchise you mentioned a couple of the stats you know we cover 46,000 you know we have 46,000 banking clients broadly defined we have 4.2 million clients that are which if we get the opportunity to talk about wealth we'll talk about that a little bit more but 4.2 million consumer investment customers if you will that are part of the part of the bank but also you know not only using our traditional banking you think about it but using us for their investing future as well when you combine that with you know we do about 500 trillion in payments a year So thinking about that number and money circulating through the global economy, we do have the benefit of seeing a lot. And not a plug for the Institute, but if you don't get the information from the Bank of America Institute, I would suggest that you give it a look. And to that point on strength, interestingly, a few of these things are more well-known today, but I think it's worthwhile. Yes, there's the high-level numbers of earnings growth, nominal GDP in the U.S., which is pushing 7%, or close to 7%. Below the surface, I think the numbers are even more supportive of what we've been seeing and give some comfort, in the near term anyway, for continued growth. There was a lot of talk last year, or even coming into the spring, about a K-shaped economy in the U.S. For those not familiar with it, just thinking more that the upper end was doing better than the lower end. We think about it in terciles. And if you look at that data that we have on those groups, there are a lot of supportive information that show the growth in the economy is more diversified throughout the economy than it was perhaps a year ago. What do I mean by that? Take a look at the wage growth numbers that we show. If you look at wage growth on a three-month rolling average, that lowest tercile is now at a rate that's above, in terms of growth, above the higher two sections. In addition to that, if you look at spending, which we just had some numbers out recently that we talked about, and that's through our debit card and our credit card information data that we see, discretionary spending across those wage groupings are also all growing and they have been you know predominantly throughout the year the last thing I would say on that front if you look at deposit balances for all those clients they are elevated to what we've seen historically so I think from a consumer perspective you can see very supportive of you know a good environment if you take a look at one of the other ones that's probably not as familiar because I wasn't until recently when I was looking at something else you know people don't know that the largest employer in the US is small businesses of which there's like 3.9 million we touched about 3.4 million of them and their hiring their desire to hire is at one of the highest levels that it's been you know in the near term and the optimism there is strong as well so I think that gives you a little bit more depth beyond you know some of the government you know data that's available and some of the other information so you don't see any change in that microeconomic background we're not we're not seeing it we're not seeing any deterioration it's it's continued strength it may not be at the highest level that it's been over the last 12 months but we do we do see continued strength what about outside America outside America I mean our information is obviously considerably more corporate and commercial you know we're seeing varying growth you know throughout throughout I mean I think everybody here is a little bit more familiar with where we're seeing higher areas of growth lower you know areas of growth the other thing that I would say is that obviously with this rebuild of various supply chains as the world is taking a new form relative to where it was five years ago. Great deal of interest in being able to move that money around, which obviously we think is very supportive of our global payments business and our global banking franchise.

SHARMINI PERIES- Shall we move to the more the short term? Last week, our CEO Brian provided guidance at another conference.

Warner and if you had any thoughts about the the quarter sure I would I would say a couple of things I think when Brian was the first to speak or he was the first to speak I think expectations were high just based on the markets we talk about global markets but the markets environment that we had in the first half of the year particularly the second quarter I think the enthusiasm kind of waned throughout that conference as more people spoke and it was clear it's not going to be as robust as it was in the second quarter of 2026 which was exceptional a lights-out quarter I think by any by any measure but I think it's important to take a step back and think about not all those businesses are alike across the street much much like we all do the analysis of how we're doing relative to peers and if you take a look at those that you know the markets as businesses in particular there are a lot of factors that drive different performance in a quarter and we do see in most quarters you know variation what do I mean by that you know different products you know some firms are better in equities some firms better in in FIC and within FIC you have macro products thinking rates and FX and commodities you think micro you have mortgages you have munis and other products and you know sometimes not every firm is even in those products. So then you get into the geographic diversity and it's a little bit more complicated in terms of the quarter-to-quarter analysis. I think the way we've always looked at it is obviously we're striving to deliver the most for clients and for shareholders but at the same time quarter-to-quarter you're going to have the noise. Take a look at where you are on a year-over-year basis and you know I left the markets business a year ago but when I took it over in the summer of 2020 and we started our I would say our growth plan if you will you know we were able to my motto at the time was to deliver growth regardless of what the market conditions were because we had room for market share growth and we grew over 10% each year and we watch every quarter but we're also looking at trends that are a little bit longer than a quarter you know similarly with investment banking deal timing you know things move around within a quarter based on economic conditions regulatory conditions and other and so we had a bit of movement there and then you also have to consider again you know sectors we've talked about our desire to improve our tech banking team and to make investments in investment banking overall I think the most recent stats to give you an idea I think we've hired it's 34 or 35 MDs you know so far this year if you take a look at that dispersion within that we've got 10 or 12 that are in industry groups in the US it's 10 to 12 that we've hired internationally predominantly here in London and you know we focused on M&A as well we have a handful of hires you know from there and obviously that doesn't up to 34 or 35 but those are the the key highlights there and you know we're focused on growing those businesses so we remain as you know optimistic about the environment we still find it to be a heavy investment environment a heavy activity environment in the markets and you know we remain constructive on that that front we'll talk about our international franchise in a minute let's let's move away maybe from macro and and discuss strategic direction for the for the bank.

Can you talk about where you see the biggest opportunities for growth?

Yeah broadly defined there's a there's a few and maybe I'll focus on we brought it up in our investor conference last year investor day last year at times it was worded specifically at other times it was more implied but But if you take a look at the opportunity set we have in broadening and deepening relationships is a big part of what we're focused on. Obviously, there's always new customers and new clients, and you think about that as your potential inputs for growth for your business. But if you look at growth opportunities we have within businesses and growth opportunities across businesses, I think we've always been focused on it. think it's a higher priority today and as far as things that Dean and I in our role and Brian asked us to overlook take you know oversight of the businesses on a day-to-day basis is to help drive those synergies across and what do I mean by that you know the I think that some of the easier ones to to think about are you know within businesses you know taking if we stick with the consumer for a second it's I think we have 70% of our our traditional banking clients have credit cards so obviously there's room we can grow credit cards there if you take a look at I mean it's pretty much across the board you can look and for each of the businesses that we're in there are opportunities to do more with those clients and things that we're already or customers that we're already you know executing on if I flip it over and and go to markets we talked about it extensively on investor day it was you know we we have opportunities to do more with the clients that we have relationships with today and it could be in specific products within markets and just as like I highlighted one for consumer you know you can go across commercial banking you can go across each sector and you'll find that we're you know we're really good but we can be better, and those are the opportunities that we think are going to drive better client value, and are going to help drive shareholder value as well. The cross-business is another one that it seems obvious, or it may not for some of you, but we turn around and look at it and say, OK, I mentioned that number on consumer investments, which is a very unique business. Not every firm has it, if we think about our peers you know across the board globally and you know the the penetration of those clients that we have traditional consumer bank relationships with that we also have this consumer investment with is sometimes I think it's I think we have nine million I think is the number that we have that are using us for you know investments as well and as you talked about we had you know 70 million relationships so give you an idea of the scale of what the opportunity set is you that's one and you can go literally across every business that we have and you can turn around and find you know similar things you know business banking you know typically a lot of what you think about in traditional banking services that's another funnel for wealth you know broadly defined in the in the wealth platform and you can go on and on and on in each of these businesses that we have where we have capabilities and strengths domestically and internationally that you will find to be very favorable for you know the users or our clients and customers and that also just continue to drive value we kind of talk about it as an ecosystem a flywheel you can use whatever term you want but if we're if we have a good relationship with you and we can demonstrate that there are other products and services that we can deliver that make you better whether it's your personal life or whether it's your

company operate better that's what we're focused on and and from your position do Do you find those revenue synergies across more difficult to generate than the ones inside a business line? Is that a trick question?

I think like everything, it's all about execution. You need to set up your KPIs. You need to let people know that it's a priority. People, I think people want to do the best that they can and they usually have their set of objectives that they're focused on. So Dean and I are trying to help expand that a little bit and show that this is as important as many other things that that you as a business owner may be focused on and in fact you know it's not an acquisition of a client in that way there's already a good experience there's already business being done you don't have to go sell a whole new experience you know it's just more about hey we have these other capabilities these two or three seem they could align with you know some of your objectives and let me tell you how we can we can do it yeah and they know us yes since since we're in London let's focus on our international business or at least we were a small part of it yes but it was a meaningful part it was a key focus of the investor day last year in November so what do you see as the biggest opportunities for growth and and what do you need to do to capitalize on them sure so reflecting back on investor I think we had more than a few people speak to the opportunities in International specifically. I was one of them. I had my markets hat on for the last time and spoke to the markets business, but Wendy Stewarder runs our commercial banking business. In addition to Matthew who runs corporate investment banking and I think Bernie brought it all together for us as head of International and tried to show and did show what the capabilities are and what this potentially means for growth. Just to reset for everybody, the numbers that were thrown out were a $4 billion increase in revenue, about $2 billion in pre-tax, and the expectation were to deliver about 18% return on allocated capital, which is great. When you go down into each of these businesses, what is that? I just mentioned it briefly, but for markets, it was we have institutional clients that we could deepen the relationship with by meaning doing more of the products that we're engaged in and they're engaged in but we don't seem to have a good piece of market share with them that was the most straightforward when you flipped it to corporate clients there was more opportunity we've identified clients that we may not be doing business with today that we can be a value add and there's a relationship within corporate banking or investment banking that we just need to turn on the markets business you know commercial banking we we talk about it a lot but maybe you know not enough in this environment and being in this room it may be you know may resonate a little bit more but for domestic US companies and we are depending on the day the largest commercial you know lender in the in the in the country and thinking about 50 million in sales up to about 3 billion in sales you know a lot of those companies have either clients or production or suppliers in other parts of the world and so a big opportunity for us is you know we refer to as excuse me you know the foreign subsidiaries in doing business with them like I said before if we have a good relationship you know with the the kind of home operation when they go to expand internationally we want to be part of that discussion so whether it's not part of the discussion part of the execution its payments its FX hedging its rates all of those things and deliver that between the commercial bank and the corporate excuse me in the investment bank and you know that flows you know similarly for clients that we have that internationally that are as the as the world supply chains are changing and some of those businesses are opening up or expanding their operations in the US we want to be part of that whether that's Europe you know Asia, South America. So you can see that there are a lot of synergies that may not seem obvious until you dig in a bit. But it's really across the board between commercial banking, corporate and investment banking, and markets. And it's a priority.

Thank you. You've touched on most businesses. One more maybe, the wealth management business. As you look at the medium term, a five-year view, what gives you confidence we can accelerate net asset growth? I mean, we spoke about 4% to 5% growth. What are the drivers of that type of opportunity to get there?

Sure. I guess a couple things. First, just resetting again on what our wealth platform is or wealth capabilities that we offer. I mentioned we have the consumer investments business, which isn't a direct answer to your question, but I'm gonna weave it in anyway. We have about 600 billion in assets there, consumer investments, which we have a target for a trillion, which isn't part of the wealth NNA that we're talking about. But it is an important part of how we think about this wealth continuum that we have and the capabilities of offering different degrees of high touch and low touch for investors depending on their needs bringing it back to specifically Merrill I think there are a handful of ways and I think the team's done a pretty good job articulating them but for the for the benefit of those that don't pay attention to it as much because we are a domestic wealth management business also like the consumer business you know the traditional place to start is with your financial advisors that provide you know that high touch experience for their client so there are a couple ways that you achieve that one is through hiring one is through training historically I would say the last handful of years maybe three to five years the recruiting wasn't as high of a focus for us as it is today I think the numbers through you know yesterday we're going to be if we forecast out for the rest of the year we'll hire more FAs than we did last year that's a positive and the assets that are coming along with them are almost double the anticipated and almost double what and again these are these are not hundreds of billions of numbers numbers they're you know tens of billions but to put some context on it we're we're pleased with the progress that we've made there you know we're continuing to hire people you know market executives in those local areas where we need to upgrade or improve and And we're expecting to see good benefits from that. The other part of it, which may not be in the trainees, we have about 2,500 trainees that come through each year. And you're going to obviously have not 100% retention, but we do see about 25% of the new business that we get tend to come out of the trainees. So existing plus new, and then the power of really what we have beyond that is all these other businesses that we talked about that provide a source and an opportunity to build out a wealth relationship. You know, small business, business banking, commercial bank. It really touches everything, and I think that we could probably, we will be focusing on more. and probably continue to hear this be part of the regular conversation we have. There's also a part of the business which isn't as clear because, candidly, five years ago, I'm embarrassed to say I didn't know as much about these aspects of the business as I do today. But we have two other powerful, I think, in this category. We have employee banking and investments, which is really us having a relationship with the individuals of a company. So we may go to a company and say, we can offer these benefits to your employees for banking. We just announced, or Bank of America, excuse me, Bank of New York announced, and we announced that we did something with them a few months ago, I think it was second quarter. But again, this is another source of opportunity for wealth and for our traditional consumer banking. Then we have the other, which is workplace benefits, which is more about relationships with corporations and managing their 401k businesses, as well as their employee equity plans. Those are, it's a little bit of, you don't see much written about it. In general, in the industry, there's a handful of people or companies that can offer both of those capabilities and it's another source of of contact and introductions with people that we can then provide additional you know investment in and wealth services so a little bit like elsewhere in the organization growth within the business and across yes thank you and shall we well we spoke about the macro and and most of our businesses maybe we should go towards more operational subjects.

The company continues to deliver sustainable operating leverage, investment in growth, talent, tech. As you look across the business, how do you think about balancing expense discipline with investing in growth? And maybe a word in that context about our tech strategy.

Yeah, sure. Well the easy answer is growing revenues faster than expenses right that's the that's the that's the operating leverage not to oversimplify but you know within that what's the construct in terms of how we you know think about investments and investments take you know a variety of forms you know tech is obviously a big part of that and how do we think about you know tech in general you know does it make does it help us execute better with customers and clients and then second how how does that fit into keeping our competitiveness or competitive levels high and so we say that well that sounds pretty pretty reasonable I think you know you kind of would run your life that way but then it turns into okay well how do we prioritize within tech you know we've we have a large and important tech budget like most firms and then we have to start to think about okay within that tech investment what's it what's important to us how do we prioritize within tech and there are things that there's no negotiation around never down we call it which is you know you don't want to be in a situation where you go to use the bank and you can't access whatever it is that you're looking to access and whether that means customers or on the institutional side of the business you go to do a transaction and you can't execute not to mention it introduces risk within the businesses when you're trying to manage risk so that's that's obviously a top priority cybersecurity which which has become even more pronounced as of late given advancements in AI and in a lot of the press that's been out there so you're always thinking about those two is kind of non-negotiables but you have to also consider other things that are going to be important to you you know we spent a bunch of money over the last probably seven years just broadly on the tech stack operating it better data cleaning up data making data more usable by more people mapping out processes which you know at the time I'm sure many people thought that why are we spending as much time internally doing that well one it creates a a safer environment to operate from an operational perspective and lo and behold when you start to look at AI and introducing it into your work processes it's a pretty good position to be in that you have your processes mapped because you should be able to accelerate um AI when you uh when you want to. I mean those are the those are the those are you know those are the top and then on the margin you're always looking at how can we you know improve you know where can we do it organic growth do we need tech you know for that I think those are those are those are the main we're always looking at it to be competitive and being aware of what what is out there but you have to do it within a cost-conscious framework I always like to say you know whatever your tech budget is people will without question come back and say well that's not enough money for me to achieve what I want to achieve and like everything else it's kind of life you have a budget you have to operate you need to think about it that way so that I almost left this off which is probably number three candidly is thinking about things on a platform basis so thinking about horizontals that we're operating on it's easy to become very siloed in your businesses and have tactical responses to demands that are being driven by the marketplace or just general improvements that you want to make or capabilities. The real goal is to have you know these platforms and I'm just you know using 80-20 but you know that has the 80% of the commonality and what you need to do you know in a in a platform and the customization that needs to be done for a different client group, customer group or something that risk may need, or operations may need, but have that be the 20% that's differentiated, and in theory, and I believe in actuality, where we've, speaking from the markets business, where we did a bunch of that, you get more for your dollar out of tech. So if I would take a step back for a second and erase two minutes and go back in, And I would put the platform component as up there in the top three.

So I mean, talking about the transversal aspect of our tech strategy, and you discuss all the pillars of it. AI is probably one of them. We were, as a firm, early adopters. Where do you see the strongest outcome? And what are the use cases you're exploring next?

You know, we talk a lot about, and others have, so I want to dwell on Erica for consumers and thinking more of small language model than large, the way we think about it today. But when you really look at it, it was a way of self-serve for customers. So you have a question, you have a problem, you don't necessarily need to speak with someone. And so when we reflect further on that, there are broader applications. Now, I can share a couple of examples, but when we look at AI in general, I think one of the biggest risks to implementation of AI is people being fearful of it and thinking that it's going to replace them, and so you're going to, us, I shouldn't say them, us, and that's not unique to AI. It's apparent every time we try to use new technology, someone's always going to be resistant. But at the same time, when we had, I think we have it out to like 200,000 people now, which is 90% or 95% of the people that we have working together, there's more familiarity with it, right? And so what's the benefit there? People get to use the technology, see it, understand it, excuse me, hopefully be more comfortable, too. then it's about general productivity and how is it improving their life at work and how is it improving workflows and so on and so forth. Second place where AI is in third parties, we're looking at a variety of providers out there to do different things for us where we think that there's a place for AI, increased automation, so on and so forth. A lot of the standard things that you hear about out there, I wouldn't say from that perspective it's anything truly unique you know the last place is looking at things that are more complex and custom and unique to us and then working with internal and external to see if there are solutions that we can we can accelerate it we were just talking this morning you know there are a lot of questions around this particular question I was asked more on how much longer it wasn't addressed to me it was addressed to Michael Hartnett but how much longer or how long can the CapEx cycle go on for some of the larger companies that are spending large sums of money and the question was really getting at you know are we going to see returns you know quickly enough I think that the most measurable place that most companies have articulated is around the tech organization itself coding and the advancements that are happening there and the you know the numbers that are being thrown around are between 15 and 20%. Early on people threw out like 40 to 50% numbers. I think most industries have gelled around more of a 15 to 20%. We see those numbers in terms of our productivity from the 19 or 20,000 people we have coding. So that's clearly identifiable. And then as we've applied Erika and Erika-like capabilities some more self-serve internally we are seeing improvement so historically you know this kind of self-help was only external now that it's internal we're seeing you know considerable reduction in help desk calls for things that are pretty basic I know it doesn't sound you know revolutionary but that's where you're you're gonna start to see or where we have already seen you know those benefits you know starting to come through the system and then you know we have other places just in other products that we're offering out to people you know we talked about payments you know we have cash pro which is you know more of a commercial and corporate offering for treasurers to use and there's an Erica that's that's part of that discussion now where people can kind of self-help and self-direct and in and operate you know more smoothly so we think we're going to end up seeing the true results of this and the normal KPIs that we look at. I also think that you know probably in a few years time there's going to be a lot less talk about AI as separate and differentiated and it's just going to be part of a broader discussion on technology and how are you thinking about tech. But we are seeing it already in the you know the areas that I mentioned and I think that that's going to continue to accelerate. I left off, you know, consuming a lot of information and data and being able to parse through it and summarize it, that's standard and doesn't really require a lot of discussion. Fair enough.

One last for me and maybe we'll have time for one question in the room. We constantly generate excess capital and have historically returned a lot to shareholders. How do you think about deploying excess capital and and obviously waiting, investing versus returning to shareholders.

It's constant and ongoing. I wouldn't say that there's an easy answer, but I think we have some principles that we operate by. First and foremost, we have to remain financially strong, because if you're not financially strong then you can't be there for people, so that's clearly a top priority for us, thinking about strengthening the balance sheet and liquidity in capital. So it goes without saying, but I'm saying it, that that is the top priority. Supporting the broader economy, I mean banks are, we're a large financial services company obviously, but banking is a large part of it. Supporting the broader economy is important. And then you get into a couple of the points I brought up earlier, which are what do we need to do for investment to improve the business that we're doing with people. You know, I guess for thinking about growth, not in any particular order, but these are these are top five, but I would say financial strength would remain number one. The others are all important and, you know, potentially equally important thinking about what do we need to invest to grow in fifth that being the obvious you know dividends and share repurchases so thinking about that framework and then saying well how do we make the decision to go you know to return you know versus invest in the business you know we want it to be marginally accretive on these targets that we have of 16 to 18 percent so from perspective I don't think it's surprising or complicated but that's kind of the framework of our logic and I think you know we've demonstrated the ability to do both, increase dividends and continue share buybacks and growth.

InsideFood as always, thank you for your time. We have four Four minutes left. Maybe we can take a couple of questions from the room, if any, I think you've covered a lot. Thank you, Jim. Thank you.