Bank of America Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 16, 2024

There are 9 speakers on the call.

Operator

Good day, everyone, and welcome to the Bank of America Earnings Announcement. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session. Please note this call may be recorded. I'll be standing by if you should need any assistance.

Operator

It is my pleasure to turn the conference over to Lee McIntyre of Bank of America.

Speaker 1

Good morning. Thank you, Leah. Welcome and thank you for joining the call to review our Q1 results. Our earnings release documents are available on the Investor Relations section of the bankofamerica.com website that includes the earnings presentation that we will be referring to during the call. I trust that everyone's had a chance to review the documents.

Speaker 1

I'm going to first turn the call over to our CEO, Brian Moynihan, for some opening comments before Alistair Borthwick, our CFO, discusses the details of the quarter. Before they begin, let me just remind you, we may make forward looking statements and refer to non GAAP financial measures during the call. Forward looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause our actual results to materially differ from expectations are detailed in our earnings materials, our SEC filings that are available on our website. Information about non GAAP financial measures, including the reconciliations to U.

Speaker 1

S. GAAP can also be found in our earnings materials that are available on the website. So with that, I'll turn the call over to you, Brian. Thanks.

Speaker 2

Thank you, Lee, and good morning to all of you and thank you for joining us. I am starting on Slide 2 of the earnings presentation. Once again delivered a strong set of results in quarter 1. We reported net income of $6,700,000,000 after tax and EPS of $0.76 This included the additional expense accrual for the industry's special assessment by the FDIC to recover losses from the failures of Silicon Valley Bank and Signature Bank. This lowered our quarter 1 EPS by $0.07 Excluding net expense, net income was $7,200,000,000 and EPS was $0.83 per share in quarter 1.

Speaker 2

Alistair is going to walk you through the details of the quarter momentarily, but first let me give you a few thoughts on our performance. We delivered good improvement in our fee based business, driven both by continued organic growth and good market conditions. Investment banking saw a nice rebound this quarter. We delivered nearly $1,600,000,000 investment banking fees and grew 35% from the Q1 of 2023. Matthew Coater and the team have done a great job delivering market share growth.

Speaker 2

In addition, our results reflect the benefits of investments made in our middle market investment banking teams and dual coverage teams. Matthews has utilized his power wisely to grow our middle market team from 15 bankers in 2018 across a dozen cities to more than 200 bankers in twice as many cities today. Both groups work with our commercial bankers and wealth management advisors know cities to deliver for our clients. Investment in brokerage services revenue across Merrill and the private bank grew 11% year over year in quarter 1 to nearly $3,600,000,000 Continued investments in our advisor training programs and digital delivery for our clients as well as positive market helped us deliver strong revenue. Asset under management flows were $25,000,000,000 in the quarter.

Speaker 2

Sales and trading, excluding DVA, delivered its 8th consecutive quarter of year over year revenue improvement. At $5,200,000,000 this is the highest first quarter result in over a decade. We have allocated more balance sheet invested in talent to build on our strengths over the last 5 years in this business. Those investments plus the intensity of the teams under Jimmy Demar's leadership has resulted in good momentum and market share improvement. From a balance sheet perspective, we entered the quarter expecting modest moves in loan growth and a decline in deposits that were our expectations.

Speaker 2

What we actually delivered was growth in any deposits of more than $20,000,000,000 Pending loans are down modestly due to the expected credit card seasonality, otherwise loans are pretty stable. This balance sheet performance along with our continued pricing discipline allowed us to deliver better than expected NII performance. We told you last quarter that we expected NII to decline from the Q4 of 2023 to the Q1 of 2024, a decline of about $100,000,000 to $200,000,000 We actually reported today NI of $14,200,000,000 that was $100,000,000 higher than quarter 4, exceeding our guidance. We continue to deliver strong expense management. Year over year expenses adjusted for the FDIC assessment was up a little less than 2%.

Speaker 2

That compares to 4% plus inflation rate. We also continue to invest in our company while managing those expenses. We had several categories of stronger fee based revenue in the Q1 this year. This drove higher formulaic compensation and processing costs of the increased activity. Fees and commissions were up 10% year over year.

Speaker 2

We are happy to pay for that revenue and deliver more earnings to the bottom line because of it. So how did we do all that and hold expenses under inflation rate? Well, we remain focused on 3 primary drivers of Bank of America. First, our operational excellence platform continues to deliver and improve processes. These savings from that growth help fund the future growth in the company and lower the risk.

Speaker 2

Secondly, we managed headcount as we eliminated work. Recall we noted the expectation in January of last year that our headcount would be down throughout the year. Our headcount at the end of Q1 2024 is down by more than 4,700 people from the Q1 2023. It declined 650 people just from the end of 2023. The digitization activity is also driving ongoing expense cost savings, customer retention and market share improvement driving across all three factors.

Speaker 2

It also supports the ever increasing volumes of client activity with little increased cost. I would highlight our continued capital strength with common equity Tier 1 capital of 197,000,000,000 dollars That amount of capital is $31,000,000,000 over the current regulatory minimums for our company. That capital has allowed us to both support our clients and return $4,400,000,000 to shareholders this quarter and share repurchases and dividends. Let me highlight a few points on organic growth before I pass over to Alistair. Now I am turning to Slide 3.

Speaker 2

You can see Slide 3 the highlights of the quarter one success of organic activity across the businesses. We continue to invest and enhance our digital platforms. We provide our customers with convenient and secure banking experiences. By leveraging our technology and continuous investment in that technology and putting customers center of everything we do. We have successfully deepened our relationships and expanded our customer base across all our businesses.

Speaker 2

In consumer, we added 245,000 net new checking accounts this quarter. This completes 21 straight quarters of net additions. Dean Haff and AJ, Aaron Levine and Holly O'Neil helped drive that business for us and continue to perform well, driving strong performance across our consumer franchise. These checking balances continue to drive the performance of consumer deposits. These checking additions are important for many other reasons.

Speaker 2

On average, 68% of our deposit balances have been with us for more than 10 years. 92% of the customer checking accounts are primary checking accounts in the household, meaning that they're the core operating account for the household for their financial lives. So when we onboard a client, we start a long term valuable relationship. About 60% of our checking accounts customers use a debit card on an average of they do about 400 transactions per year on that card. The new checking accounts have traditionally opened savings accounts about 25% of the time within a few months of opening that checking account.

Speaker 2

At opening a new checking account on average brings about $4,000 in balances below our averages, But that continues to grow and within a year, it's 2 times that amount. Likewise, when we open a new savings account, it on average brings about $7,000 in balances. This also deepens it by about 2 times during the year. Investment relationships and credit card account openings continue to be strong in the Q1 as well. And while we believe some of these statistics are best in class, rest assured there are plenty of opportunities for further growth in our franchise and our company.

Speaker 2

As we think about our Global Wealth team led by Eric Shim, Lindsay Hans and Katie Knox, that team added 7,300 net new wealth relationships to Merrill and the Private Bank. Our advisors opened 29,000 new bank accounts in the quarter with their customers deep in their relationships. More than 60% are investing clients in Merrill 90% of our private banking clients now have a core banking relationship with us. In addition, across our wealth spectrum, we saw $60,000,000,000 in total flows over the last year. As you can see on the slide, we now manage more than $5,600,000,000,000 in total client balances across loans, deposits and investments in consumer and wealth management.

Speaker 2

When we moved to Global Banking, we added more new relationships in this quarter than we did in last year's Q1. We also increased the number of solutions per relationship with pre existing clients. Just like in our consumer business, we have seen good growth in customers seeking the benefits of both our physical and our online capabilities in our talent and also the care of our talent relationship managers who provide financing solutions and advice for our clients with global needs. A couple of other points I'd make on our digital success. Erica, our virtual banking assistant reached a key milestone of more than 2,000,000,000 interactions since its introduction about 6 years ago.

Speaker 2

It took 4 years to reach 1,000,000,000 interactions. It took just 18 months to reach the $2,000,000,000 In August, we extended Erika's reach and launched Erika in our Global Treasury Services business and CashPro. Erica has resolved 43% of the CashPro chat inquiries automated, demonstrating more and more clients are able to self solve. This is a great example of best practices being shared across the scale of our company. 2nd, as an example of our digital success, Zelle continues to grow.

Speaker 2

It wasn't long ago that we noted that the number of Zelle transactions in a quarter had surpassed the numbers of checks written. Shortly after that, Zelle transactions reached 2 times the number of checks written. This quarter, Zelle transactions has now passed the combined number of checks written, plus the amount of cash withdrawals from tellers and from ATMs. That is a rapid adoption and represents continued cost savings and convenience and security for the customers. These stats and others are included in our quarterly acronym for our digital banking progress.

Speaker 2

That's included in slides 202224. I encourage you to read them. They show our market leading efforts representing 1,000,000,000 of dollars of our investment over the years. And we are continuing to drive growth with expense growth under control. These solid earnings results achieved this quarter are a testament to the dedication and talent of our 212,000 people who work here and deliver for our customers every day.

Speaker 2

I thank them for another great quarter. And with that, I'll turn it over to Alistair.

Speaker 3

Thank you, Brian. And I'm going to start on Slide 4 of the earnings presentation. So Brian covered much of the income statement highlights and he noted the difference in our reported results and the results adjusted for the FDIC assessment. So I'm not going to repeat that. I'd just add that we delivered strong returns.

Speaker 3

On a reported basis, our return on average assets was 83 basis points and return on tangible common equity was 12.7%. And when adjusted for the FDIC assessment, our efficiency ratio was 64%, ROA at 89 basis points and ROTCE at 14%. So let's move to the balance sheet on Slide 5, where we ended the quarter at $3,270,000,000,000 of total assets, up $94,000,000,000 from the 4th quarter, and the bulk of that increase was in global markets to support seasonally elevated levels of client activity. Outside of the global markets activity, we'd highlight both the $23,000,000,000 growth in deposits and the $20,000,000,000 decline in cash levels. So with that increase in liquidity, you'll also note that debt securities increased 39,000,000,000 dollars which included an $8,000,000,000 decline in hold to maturity securities and a $47,000,000,000 increase in AFS securities.

Speaker 3

And those are mostly hedged U. S. Treasuries added with yields effectively at cash rates. At $313,000,000,000 our absolute cash levels remain higher than required. Liquidity remains strong with $909,000,000,000 of global liquidity sources, and that's up $12,000,000,000 from the 4th quarter and remains $333,000,000,000 above our pre pandemic Q4 2019 level.

Speaker 3

Shareholders' equity increased $1,900,000,000 from the 4th quarter earnings as they were only partially offset by capital distributed to shareholders. And AOCI was little changed in the quarter. During the quarter, we paid out $1,900,000,000 in common dividends and we bought back $2,500,000,000 in shares, which more than offset our employee awards. As part of those share awards in the Q1, we announced our 7th consecutive year of sharing success compensation awards, covering more than 95% of our associates and further aligning their interest with shareholders. Tangible book value per share of $24.79 is up 9% year over year.

Speaker 3

Looking at regulatory capital, our CET1 level improved to $197,000,000,000 from December 31, and the CET1 ratio was stable at 11.8% and remained well above our current 10% requirement. We also remain quite well positioned against the current proposed capital rules as our CET1 level is also above the 10% requirement even when we include estimated RWA inflation from those new proposed rules. Risk weighted assets increased modestly driven by client activity in global markets and our supplemental leverage ratio was 6% compared to a minimum requirement of 5%, which leaves capacity for balance sheet growth. And at 475,000,000,000 dollars of total loss absorbing capital, our TLAC ratio remains comfortably above our requirements. So let's turn our balance sheet focus to loans by looking at the average balances on Slide 6.

Speaker 3

Average loans in the Q1 of $1,048,000,000,000 were flat compared to the Q4 and they improved 1% year over year as solid credit card growth was partially offset by declines in securities based lending. Commercial loans grew modestly year over year. We experienced modest improvement in revolver utilization in commercial lending in the Q1 and that's being offset for the most part by paydowns as larger client financing solutions are being met through capital markets access. And lastly, on a positive note, loan spreads continued to widen. Moving to deposits, we'll stay focused on averages on Slide 7.

Speaker 3

And relative to pre pandemic Q4 twenty nineteen, average deposits are still up 35%. Every line of business remains well above their pre pandemic levels and consumer is up 32% with checking up 38%, driven by net new checking accounts added as Brian noted earlier. Linked quarter total average deposits remained steady at more than $1,900,000,000,000 The total rate paid on consumer deposits in the quarter was 55 basis points, And while the rate increased 9 basis points from the 4th quarter, the pace of increases continues to slow. The mix of low rate and high quality transactional accounts keeps the rate paid low. Wealth Management and Global Banking also saw a slowdown in the increases in their rate paid and slowdown in the rotation out of non interest bearing accounts in the Q1.

Speaker 3

Focusing for a moment on ending deposits and movement from the Q4, this quarter we delivered good deposit growth. Total deposits grew $23,000,000,000 and they're now $100,000,000,000 above their trough in mid May of 2023. Consumer Banking deposits saw growth in both consumer interest bearing and non interest bearing. Global Banking continued their more normal pattern of deposits seen for the past 5 quarters and up more than $30,000,000,000 over the last year. Deposit growth exceeded loan growth for the 3rd straight quarter and our excess of deposits over loans expanded to $897,000,000,000 and that's nearly 2x the $450,000,000,000 we had pre pandemic.

Speaker 3

You can see that on the upper left hand side of Slide 8. We continue to have a mix of cash available for sale securities and held to maturity securities. And this quarter, our combination of cash and AFS is now 52% of the total $1,200,000,000,000 noted on this page. You'll also notice the continued change in mix of the short return portfolio as we again lower cash and increase AFS securities that are mostly hedged and have similar yields to the cash. Note also the hold to maturity book continues to decline from pay downs.

Speaker 3

In total, the hold to maturity book is now down $96,000,000,000 from its peak, and it consists of about $122,000,000,000 in treasuries and about $458,000,000,000 in mortgage backed securities, along with $7,000,000,000 of other securities. Lastly, the blended cash and securities yield of 3 60 basis points continued to rise and remained about 168 basis points above the rate we pay for deposits. The replacement of lower earning assets into higher yielding assets continues to provide an ongoing benefit to NII. Let's turn our focus to NII performance using Slide 9, where you can see on a fully tax equivalent basis, NII was 14,200,000,000 dollars Good deposit growth provided a strong start to the year for NII. And as Brian noted, NII of $14,200,000,000 increased by $100,000,000 from the 4th quarter.

Speaker 3

Now that compares to our expectation and guidance of a decline of $100,000,000 to $200,000,000 and that would have resulted in NII this quarter of $13,900,000,000 or $14,000,000,000 So we did quite a bit better than we had originally expected. The improvement in quarterly NII in Q1 compared to Q4 included the benefits of higher yielding assets and improvement in global markets NII, partially offset by higher deposit costs and one less day in Q1 than Q4 'twenty 3. Deposit balance activity more generally also aided in the beat versus our expectations. As we look forward for Q2, we expect some modest impact of lower deposits in Wealth Management as clients make their seasonal income tax payments, and we expect global markets NII to decline mostly seasonally a little bit as well. So we expect 2nd quarter NII could approach $14,000,000,000 on an FTE basis.

Speaker 3

And further, we continue to expect that Q2 will be the low point for NII and we expect the back half of twenty twenty four to grow. And compared to our guidance last quarter, we're obviously growing off a larger base of NII after having outperformed in the Q1. Regard to that forward view, let me just note a few other caveats. It includes our assumption that interest rates in the forward curve at the end of the quarter materialize. And at the end of the Q1, there were still 3 cuts expected this year starting in June.

Speaker 3

Our forward view also includes an expectation of low single digit loan growth and some moderate growth in deposits as we move into the back half of twenty twenty four. And given our recent deposit and loan performance, we continue to feel good about these assumptions. Turning to asset sensitivity and focused on a forward yield curve basis, our sensitivity to the + and minus 100 basis point parallel shifts in the forward curve at March 31 remains well balanced. Okay. Let's turn to expense and we'll use Slide 10 for that discussion, where we reported $17,200,000,000 expense this quarter, including the FDIC assessment.

Speaker 3

Adjusted for the assessment, expenses were $16,500,000,000 and the increase over the Q4 included a little more than $400,000,000 in seasonal payroll tax expense as well as higher revenue related costs and to a lesser extent annual merit increases and other annual awards like sharing success awards provided this quarter. Dollars 16,500,000,000 was just a little above our forecast for Q1, which we made last quarter and the increase is driven by better than expected fee revenue across Wealth Management, Investment Banking and Sales and Trading. And as Brian said, that's a trade off we're more than happy to make bringing more earnings to the bottom line. And while expense is up almost 2% from last year, we simply remind you inflation is up by more than 4% and we've increased our investment and we're paying for the revenue growth. So we think it represents good work by our teams.

Speaker 3

As we look forward in Q2, we expect a decline from the Q1 level as we typically see about 2 thirds

Speaker 4

of the

Speaker 3

Q1 elevated payroll tax expense come back out. And the remainder of the year expense is expected to trend down. Continued digital engagement savings and operational excellence initiatives should help us offset other cost increases for people and technology through the back half of the year. Turning to credit on Slide 11. Provision expense was $1,300,000,000 in the first quarter that included $179,000,000 of reserve release due to a modestly improved macro environmental outlook as the baseline consensus expectations improved from the Q4.

Speaker 3

On a weighted basis, we remain reserved for an unemployment rate of nearly 5 percent by the end of 2025 compared to the most recent actual 3.8 percent rate. Net charge offs of $1,500,000,000 increased $306,000,000 from the 4th quarter, driven by continued credit card seasoning and commercial real estate office exposures as swift revaluations from current appraisals and resolutions drove higher charge offs. The net charge off ratio was 58 basis points, a 13 basis point increase from the 4th quarter. On Slide 12, we show you the credit quality metrics for both our consumer and commercial portfolios. Consumer net charge offs increased $115,000,000 versus the 4th quarter from the flow through of higher late stage credit card delinquencies.

Speaker 3

We included a credit card delinquency slide number 28 in our appendix. And we're encouraged by the trend of delinquencies because the late stage increases slowed and early stage delinquencies improved as well. And that leads us to believe we should begin to see consumer net charge offs start to level out over the next quarter or so. All of this is still well within our risk appetite and our expectations, and it's consistent with the normalization of credit we've discussed with you in prior calls. Commercial net charge offs increased $191,000,000 versus the Q4, driven by commercial real estate losses and office exposures.

Speaker 3

And on office losses this quarter, we recorded charge offs on 16 office loans. 4 were a result of sales activity, I. E. Final resolution. 7 were from losses that we expect on exposures that are in the process of expected resolution in the course of the next 90 days and the rest we took as a result of refreshed valuations.

Speaker 3

We're using a continuous and thorough loan by loan analysis and we're quick to recognize impacts in the commercial real estate office space through our risk ratings, and that's resulted in several downgrades in the last few quarters. As a result of these quick actions and our downgrades in categorization, we've also refreshed the valuation of our reservable criticized properties, and we've taken appropriate reserves and charge offs in the process. Roughly 1 third of our office exposure is now categorized as reservable criticized. And importantly, the pace of the increase in reservable criticized exposures has slowed each quarter since the Q2 of last year. So we believe the losses on these office properties have been front loaded and largely reserved.

Speaker 3

We expect the losses to move lower in the second quarter, and we expect a notable decline in the second half of the year when compared to the first half of this year, absent any material change in expected real estate prices. In the appendix on Slide 29, we've included a current view of our commercial real estate and office portfolio metrics as we usually do. Okay. Let's turn to the various lines of business and offer some brief comments on their results, starting on Slide 13 with Consumer Banking. For the quarter, Consumer Banking earned $2,700,000,000 on continued strong organic growth.

Speaker 3

The reported earnings declined 15% year over year as revenue declined from lower deposit balances compared to the Q1 of 2023. Credit card loss normalization also caused year over year provision expense to increase. As Brian noted, customer activity showed another strong quarter of net new checking growth, another strong period of card openings and investment balances for consumer clients, which climbed 29% year over year to a record $456,000,000,000 That included market appreciation and also very strong full year flows of $44,000,000,000 As noted earlier, loans grew nicely year over year from credit card as well as small business where we remain the industry leader. Expenses were flat year over year fighting off inflation, merit increases, higher minimum wages and new and renovated financial centers and technology investments. So holding expense flat reflected very good work by the consumer team.

Speaker 3

As you can see on the appendix Page 20, digital adoption and engagement continued to improve, reaching a record of 3,400,000,000 digital logins in the quarter, and it showed good year over year improvement. Customer satisfaction scores at near record levels illustrate the continued appreciation of the enhanced capabilities we provide. Moving to Wealth Management on Slide 14, we produced good results and that included good organic client activity, market favorability and strong flows. Our comprehensive suite of investment and advisory services, coupled with a commitment to personalized wealth management planning and solutions, has enabled us to meet the diverse needs and aspirations of our clients. In Q1, we reported record revenue of $5,600,000,000 and a little more than $1,000,000,000 in net income.

Speaker 3

That net income rose 10% from the Q1 of 2023. Business generated positive operating leverage and grew revenue faster than expense while improving the pre tax margin year over year. While overall average loans were down year over year driven by the securities based lending, It's worth noting the strong growth we're seeing in custom lending and ending loans in the Wealth Management custom loan book are up 6% year over year. As Brian noted earlier, both Merrill and the Private Bank continued to see strong organic growth and produced good assets under management flows of more than $60,000,000,000 since the Q1 of 'twenty three, which reflects a good mix of new client money as well as existing clients putting money to work. Expense growth here backs the revenue growth, otherwise fighting off higher investment costs and inflation.

Speaker 3

Let me also highlight the continued digital momentum here. As an example, Merrill has 86% of its clients now engaging with us digitally and 80% utilizing e delivery. 76% of their eligible accounts are now open digitally. So the cost for us to open is half and the customer cycle times are improved greatly. On Slide 15, you see Global Banking results and the business produced earnings of just less than $2,000,000,000 down twenty 2% year over year as improved investment banking fees and treasury services revenue were overcome by lower net interest income and higher provision expense.

Speaker 3

Revenue declined 4%, driven by the impact of interest rates and deposit rotation to interest bearing and that impacted NII. The diversification of our revenue across products and regions continues to reflect the strength of this platform and GTS and investment banking fees are good examples. In our Global Treasury Services business, some of the NII pressure from higher rates on on deposits is offset by the fees paid for moving and managing the cash of clients and that continues to grow with existing clients as well as with new client generation. As Brian noted, Investment Banking had a strong quarter and at 1.6 $1,000,000,000 in investment banking fees, this quarter was the strongest quarter in 7 years, absent the pandemic 2020 2021 periods. An increase in provision expense included the commercial real estate net charge offs I discussed earlier as well as a larger reserve release in the prior year period.

Speaker 3

Expense increased 2% year over year, including the 35% lift in investment banking fees from the Q1 of 2023. Switching to Global Markets on Slide 16, we'll focus our comments on results excluding DVAs we normally do. Team had another terrific quarter with $1,800,000,000 in earnings, growing 7% year over year. Revenue improved 6% from the Q1 of 2023 and return on average allocated capital was 16%. Focusing on sales and trading ex DVA, revenue improved 2% year over year to $5,200,000,000 which is the highest first quarter result in over a decade.

Speaker 3

FIC was down 4%, while equities increased 15% compared to the Q1 of 2023. And the decline in the FIC revenues versus the Q1 was driven by a weaker macro trading quarter that was partially offset by better mortgage trading results. Equities was driven by strong trading results in derivatives and year over year expenses were up 4% on continued investment in the business. Finally, and on Slide 17, all other shows a loss of $700,000,000 driven by the FDIC assessment. Revenue declined year over year, reflecting higher investment tax credit deals.

Speaker 3

And expense adjusted for the FDIC assessment was down $113,000,000 driven by lower unemployment processing costs. Our effective tax rate for the quarter was 8%, and excluding the FDIC assessment and other discrete items, it would have been 9%. And further excluding tax credits related to investments in renewable energy and affordable housing, our effective tax rate would have been 26%. Thank you. And with that, we'll jump into Q and A.

Operator

We'll take our first question from Steven Chubak of Wolfe Research.

Speaker 5

So maybe just to start off with a question on capital management. Just given the strength of your excess capital position, but maybe still some uncertainty around Basel III Endgame and where the proposal could ultimately shake out. I was hoping you could just speak to where you're comfortable running on CET1 and when can we expect that you'll return to 100% plus type payout?

Speaker 2

I think you should expect that we're on a cushion. Whatever rules come out and when they come out and get clarity, we'll expect to run the requirements plus 50 basis points up to 100 basis points of excess and anything above that will be either used to continue to grow the company if needed not it will be returned. And so, we're just as all of us are waiting for the finalization of these rules right now we're sitting on $30,000,000,000 under the old reals. We have enough under the new rules as previously proposed, but obviously they're talking about changing them. So you should expect clarity on that.

Speaker 2

What you would also expect is as we think about it beginning now you are basically at the point where you are sitting on the capital, the very modest need to build a cushion to the rules as proposed and any change would be more favorable that I assume. So expect us to continue to return capital at a fairly strong rate as we move through the Q2 beyond and the rules become clarified.

Speaker 5

Great color, Brian. And for my follow-up, just on the NII commentary, Alastair, it sounds like you're still assuming some modest deposit growth in the back half as part of that NII trajectory, that recovery off the trough in 2Q. Just given your deposit balances increased $500,000,000,000 since COVID, I know some of that's going to be a function of share gains. But as we prepare for some QT driven outflows, how are you handicapping the risk of deposit attrition? And how does that impact the NII guidance?

Speaker 5

If you can frame any sort of sensitivity recognizing many of those tend to be hot money or higher cost deposits?

Speaker 3

Yes. So first thing I would just say, Stephen, as we've been up against QT now for the last couple of years. So the deposits are beginning to settle in now. And if we were to go back to if you take, for example, consumer, if you were to go back to pre pandemic and think about what long term sustainable growth rates look like for Consumer, if you just extended that through from the Q4 of 2019 to today, given that the economy is 30% larger, we kind of feel like consumer is approaching that floor. So we're still in this belief that Q2 is going to be Q3 maybe the turning point for consumer.

Speaker 3

You can see that slowing now. The rest of our business, if you look at the exhibit we put together on deposits, if you look at that bottom left chart on wealth, you'll see it slowed and grew this quarter. And then in Global Banking on the right hand side of that page, they're kind of back to pre pandemic growth rates. They're up 7% year over year. So we're seeing some structure now in the deposit base.

Speaker 3

Even with QT over the course of the past year, our deposits are up $100,000,000,000 So it has been a point of conviction of ours that as we get towards Q2, we should see the consumer side begin to stabilize. That's what's driving our conviction that NII will go up in Q3 and Q4. We're in that transition period right now.

Operator

We'll take our next question from Mike Mayo of Wells Fargo.

Speaker 6

Hi. Well, thanks for the outlook for NII and consumer charge offs. But once again, I go back to efficiency. And you highlight the $2,000,000,000 Erica interactions, the last $1,000,000,000 in the last 18 months. You mentioned Zelle transaction now double the check transactions or more than checks plus cash withdrawals from ATMs plus cash withdrawals from tellers.

Speaker 6

So for all the great tech work, the efficiency ratio improved 66% to 64% quarter over quarter, but I know you're still not happy with that 64%. So as you see ENAI decline in sight and as you have this tech evolutions continuing, when do you think you can get below a 60% efficiency ratio? What's your outlook for that? Because I'm just reconciling the numbers that we look at with all the progress you're making internally. Thanks.

Speaker 2

Mike, I think as NII sort of moves along the path Alistair mentioned, all that sort of flows through because there's no more activity attached to as you're pointing out and we continue to reduce marginal expense of that activity because largely that's consumer wealth management and global banking, which don't add lots more clients and stuff and lots more activity even though the numbers go up, it's out of efficiency. So that continue to improve our efficiency ratio. As you also well know, when the revenue growth is coming through the wealth management business, which by definition, because of the way the compensation process works, you know, has a lowest efficiency ratio in the company. That's a good thing because it grows and we get good profitability growth out of it, but we're fighting that trend and as one of the largest wealth management business in the world, if not, it's a higher percentage of our revenues and our expense base. And so we're continuing to drive it down.

Speaker 2

We're at 64%. You'd expect that to improve as the deposit balances stabilized and you know for many quarters now and starting to grow. The rate paid has really flattened out sequentially by quarter and the yield of the portfolio and the yield of the assets continues to grow. So we feel good about how it's going. Our focus is really on deploying expenses in operating leverage and as we get through the twist in the NII, you should start to see us return to that again and that will then obviously drive down the efficiency ratio.

Speaker 6

So what are you thinking about expense growth for the rest of the year or next year? For a while there, you're trying and I get it, inflation has gone up quite a bit. But what are your thoughts about expense growth looking ahead?

Speaker 3

Well, last year, remember, Mike, we told you we thought we could drive expense down every quarter. We believe this year the expense will trend down over the course of this year. And obviously Q1 is inflated a little bit with just payroll tax and some of the revenue seasonality. But underneath that, there's pretty significant revenue strength. So I think that probably cost us $100,000,000 or so this quarter.

Speaker 3

I think we probably are looking if this environment continues, we're looking at another $100,000,000 per quarter going forward. But it's to Brian's point, it's the good expense that comes with revenue growth over time. That's really the only change I'd say with respect to how we think about the expense picture.

Speaker 6

All right. Thank you.

Operator

We'll take our next question from John McDonald of Autonomous Research.

Speaker 5

Thanks. Good morning. I wanted to follow-up on the helpful deposit commentary, Alistair. So you mentioned the consumer, you're thinking that that will stabilize in the back half of the year on deposits. Wondering what your mix shift expectations are?

Speaker 5

Earlier this year, you kind of thought that those customers that had moved for rate seeking already had. And just wondering if higher rates for longer could put some pressure on rate seeking behavior again and what you're baking in in terms of mix shift from non interest bearing into interest bearing in your outlook and your planning?

Speaker 2

Yes, John, I think if you look at 7, you can see sort of the mix in the left hand corner. Remember that one of the things people have we all have to be careful about is in the global banking area, the way the fees are paid and earnings credit messes up the simplicity of non interest bearing and interest bearing, so it's complex. But if you look at the quarters coming across from the Q1 of 'twenty three through the Q1 of 'twenty four, you can see that you're seeing that the rate of change slow dramatically and kind of settle in. So I don't a lot of the money has moved in it. If you look at the 7 day average for consumer going all the way back to 30 part October, it's been relatively stable at $950,000,000,000 $960,000,000,000 So we're just getting through the tax seasons and the ins and outs and the wealth management business consumer, people paying taxes out on the wealthier side and receiving benefits on the tax refund side.

Speaker 2

So as we stabilize in that, we expect it to grow. We don't expect a massive change in how the deposits are structured from what's the money markets, what's in savings, what's in checking, what's in that. It's really slowed down and been relatively stable. So things bump around, but it's all very good value, even the highest paid balances in the wealth management business are good value for the company. But if you look at what really drives the value, it's the $950 odd,000,000,000 in checking balances, you can see on page 7, the core checking balances, that's what drives it.

Speaker 2

A

Speaker 3

Mike Doss Yes.

Speaker 5

You're still feeling Brian like the bulk of people that have kind of moved on rate seeking behavior likely have done so?

Speaker 2

Rodney McMullen:] Yeah. If you look on the consumer business and you think about tracking those deposits accounts from pre pandemic to now, which is one thing we talked about for different purposes. But if you look at where all the deposit balances, if people with lower average balances are still multiples of where they are pre pandemic, People in the higher balances are actually lower because obviously they were sitting on cash when the pandemic accumulated more cash and when rates came up they moved it. And all in that gives you what you see in consumer, which is in the end of the day, a couple $100,000,000,000 over where it was pre pandemic. And so but the people have moved and you're seeing it month to month relatively stable as we track that every month on both sides frankly.

Speaker 2

The lower average balance accounts from pre pandemic are basically bouncing around at the same level right now, not going down, not going up and the higher ones are stable, but they are down 15%, 20% for people with a $500,000 $1,000,000 balance is largely because they moved in the market. So we feel it's stabilized. There will be ins and outs and we'll see it play out, but it's extremely valuable no matter how you look at it.

Speaker 5

Okay. And maybe as a quick follow-up for Alistair, it's nice to see the core NIM, the net interest yield ex markets inflect positively this quarter. Is that sustainable? Do you feel like and what are some of the fixed asset reprice dynamics that are tailwinds beyond the $10,000,000,000 per quarter on securities in terms of like loans and swaps that are come due over the next year or 2 and help the NIM a bit? You talk a little bit about that?

Speaker 3

Sure. We've talked about the fact that the net interest yield obviously, this quarter benefits from the NII growth. So you're getting in the numerator. But we inflated the denominator in terms of the average earning assets last year as we just made the balance sheet more liquid. So that's going to allow us to continue as the deposits grow to grow the net interest income over time without necessarily growing the other earning assets.

Speaker 3

So Q2

Speaker 2

was a little more

Speaker 3

of a challenge, but going forward, I expect all the NII improvement in Q3 and Q4 to drop into that net interest yield. And part of things supporting that, John, as you pointed out is, we do have loans repricing, because we've got loans coming off the balance sheet. We're booking new loans at higher rates. So that's one element. 2nd element is we've got securities that we're reinvesting underneath all this too.

Speaker 3

So obviously, we're sweeping the hold to maturity pay downs and reinvesting those at much higher rates. And then third, the teams have been working hard at repricing the balance sheet broadly for things like loans. And I believe we've now had 7 quarters in a row of improving loan pricing. So we just got to keep grinding away at that. Got it.

Speaker 3

Thank you.

Operator

We'll take our next question from Betsy Graseck of Morgan Stanley.

Speaker 7

So thanks very much for taking the question. I guess, I just wanted to follow-up on the conversation you're just having. And Alistair, I know that look, your NII guide improved this quarter due to 1Q results being better than what you anticipated a quarter ago. My question is on the second half twenty twenty four improvement. I guess that it's going to be an improvement from first half, right?

Speaker 7

That's basically the base that you're looking at. I'm wondering how you're thinking about the NII trajectory on a year on year. I believe NII is down about 3% year on year in 1Q. Should we anticipate that that is kind of stable pace throughout the year or that reduces as well when we're talking about second half twenty twenty four? If you could just give us a sense of year on year, that'd be helpful.

Speaker 7

Thanks.

Speaker 2

Betsy, before Alistair answers your question, it's good to have you back and wish you good luck with everything. So Alistair, why don't you hit that?

Speaker 7

Thanks so much, Brian. Really appreciate that.

Speaker 3

It's good to have you. So I guess a couple of things. The first thing is we haven't changed our perspective in terms of this idea of Q2 being the low point and the trough for the year. We haven't changed our point of view on growing in terms of Q3 and Q4. I think the important thing we're trying to convey is because of the continued stability in pricing rotation And because of this continued stability in deposits, we feel like that extra couple of $100,000,000 in Q1 is something that should flow through in Q2, Q3 and Q4.

Speaker 3

And then there'll be a second dynamic to watch for as well, Betsy, which is if we have less rate cuts, we're going to benefit from that. We won't necessarily benefit a lot in Q2 because there isn't enough cuts or time in Q2. But I think by the time we get to Q3 and Q4, we will know more about the rate structure at that point and we will be able to tell you more about how what we expect for the growth in the back half of the year, but we're reasonably optimistic there.

Speaker 7

Super. That's perfect. Thank you. And then just one follow-up is on the AOCI. So we all know that HTM is a portfolio that you're in runoff on, I guess, if that's fair to say, is the balances are pulling off.

Speaker 7

And this quarter, we did have a backup in the long end of the curve. Your AOCI really didn't flex that much. And part of my question is, is that a function of how the securities book is comprised and you've been shifting towards treasuries and that's reducing this risk as the back end of the curve increases. I just wanted to understand how that's trajecting in your mind, because it is a concern that people raise. And what I saw today suggests that it's much less of a concern than it had been a year ago, say, for example.

Speaker 7

Would you agree with that or?

Speaker 3

Yes. I mean, we've deliberately worked on that over time. But we've always, I think, had a pretty good program of hedging the fixed rate securities in the FS book so that they're swapped. And that means that if rates go up, we obviously benefit from that. It doesn't necessarily hurt us in terms of AOCI.

Speaker 3

So most all of the treasuries that you see in our portfolio are swapped. So I would expect very little in the way of AOCI impact there.

Speaker 7

Thanks so much.

Operator

We'll take our next question from Glenn Schorr of Evercore.

Speaker 4

Perfectly. This question on Slide 8, you talked about AFX, both securities mostly hedged to shorten their costs and the duration of less than a half a year. I know the Fed forward curve keeps not being correct, but at some point it's going to be correct and rates are going to come in. My question is, what do you do about that? How much do you think about extending duration and managing the swaps a little differently as we eventually nonunion this time transition to a different rate backdrop?

Speaker 4

Yes.

Speaker 3

So Glenn, I mean, ultimately, we'll use the same philosophy and strategy that we do to this point. We are in obviously a very good position where we have substantial deposits in excess of loans. That's what creates this excess in the top left of Page 8. And it's what allows us to put everything to work in the top right. The balance that we try to strike, you can sort of see in left hand side, we're trying to make sure that, that cash and securities yield compared to deposit rate paid performs in any environment.

Speaker 3

So an environment like this one where there's an awful lot going on with rates, we feel like if you look at that spread, I think it was 1 basis point different quarter over quarter. So we're trying to make sure that we lock in the value, monetize the deposits regardless of whatever rate environment turns out to be and we feel like we are pretty balanced now. We have got a pretty good balance of short dated, long dated, fixed and floating that should allow us to perform whether rates go up or down from here. One final thing I'll just say and I think you know this. Underneath all of this, obviously, we've got some securities repricing and to the point, I think it was John asked earlier, we've got the loans repricing as well and all of that gives a little bit of underlying resilience to this.

Speaker 4

Yes, I get that. I guess you had a lot of flexibility should you decide your turn. Just one follow-up, in deposits to debt. You had a smidgen of year on year loan growth, mostly in cards, I think. But it seems like I know how we got here, but it's a weird environment to see is really strong economy, up markets and yet no loan growth.

Speaker 4

Is this just any way you slice it, we have to like go through another year or 2 of super low loan growth or are there any leading indicators that would lead you to believe we can get back to a little bit more normal BofA loan growth and not have to wait 2 years for it?

Speaker 3

Yes. Well, I think we're probably getting closer now because remember, in the big macro, we're in that transition period where post pandemic, the economy is sort of recovering and rates are settling in and it's changing people's behaviors. So we've actually got pretty good credit card growth. And that's just offset by the fact that, for example, with securities based lending, the rates that are 5% higher, people are doing less of it. Or in commercial, we've got some loan growth, but the revolver utilization is still suppressed because revolver costs a lot more.

Speaker 3

So as the Fed has raised rates, it's changed some of the borrowing patterns of our clients, but that's not going to last forever, because as you point out, if the economy powers through at 3%, 3.5%, whatever it ends up being, loan growth is going to catch up to that over time. So for right now, we are in that transition period, but we are anticipating that loan growth will pick up at some point in the future, but it's not an enormous part of our NII guide at this point.

Speaker 2

And just remember that the capital markets opened up and a lot of the larger clients access them as they frankly have gotten used to the higher rate structure and need to refinance. So that if you look across the businesses, you've got the commercial run, but if you look across commercial businesses in the middle market and business banking, the segment up to $50,000,000 in revenue companies and up to $2,500,000,000 they actually saw progress in loan growth. It was really in the high end global corporate investment banking business where you saw sort of pay downs and bring that down. That phenomenon is one that occurs from time to time. It's probably stabilized now and we'll see it play out.

Speaker 2

But we are fighting for loan growth. And frankly, line usage stabilized and is better than it's been for the last few quarters in terms of trend. And so again, that all speaks to people feeling fine, but they're not quite as aggressive as they would be when you read the economic statistics and that's one of the great debates that you can read about in the paper every day.

Speaker 4

Thank you both for all that.

Operator

We'll take our next question from Matt O'Connor of Deutsche Bank.

Speaker 4

Good morning. So obviously there's been a lot of questions on net interest income and a lot of good color, I guess. Just when you put it all together, like when you think about the higher for longer environment, obviously, it's good on the reinvestments, you're trying to match the deposits like you talked about. But how would you just boil it down? The rate disclosure still show $3,000,000,000 kind of exposure to either side.

Speaker 4

Is stable rates for a couple of years, is that good? Or is that accelerated deposit repricing or just boil that down? Thanks.

Speaker 3

Well, I'd say generally speaking higher for longer is probably better for banks as a general statement. The question will become why are rates higher? Like what's going on in the economy? Are we talking about inflation? Is it under control?

Speaker 3

Is it coming down? Right now that appears to be the case. So that's obviously a good place. And the Fed is in a good place because they appear to have rates at a real rate that's high enough to make sure that inflation stays in a good place. Things can change, Matt.

Speaker 3

So an awful lot will depend upon just the why for rates. But generally speaking, if it's just because it's taken a little while longer for the inflation to nudge down before the next set of cuts, That's probably a good environment for us. I would expect us to perform relatively better than we've disclosed so far. And then you're asking a second question, which is around the what is the sensitivity look like to plus 100 or minus 100. We've tried to just make sure that we continue to stay balanced.

Speaker 3

If anything, that corridor of plus 100 minuteus 100 has gotten narrower and narrower over time as we're trying to lock in NII that's $4,000,000,000 or $5,000,000,000 higher per quarter today than it was 3 years ago and just make sure that the shareholder benefits from that through the course of time. So we'll see how the environment plays out. It's only been a quarter since we were last here talking about 6 cuts, now it's 3. So we just have to watch this play out and stay patient.

Speaker 4

Okay, fair enough. That's helpful. Thank you.

Operator

We'll take our next question from Ken Usdin of Jefferies.

Speaker 5

Thanks very much. Good morning. A real breakout quarter for the IVF line and just wondering a couple of things within that. One, there was a bit of a back and forth from some of the other banks about whether or not DCM was pulled forward a little bit from future. I wonder where you think about that.

Speaker 5

And but more broadly, just you guys have done a good job taking share. What inning do you think you are in terms of not so much as green but in terms of where that incremental productivity is in terms of getting that IV line to a more permanent higher level? Thanks.

Speaker 2

So I think about it, if you go back in sort of the period prior to the run up in the couple of years after the pandemic, you've had sort of mid 1,500,000,000 of years after the pandemic, you've had sort of mid $1,500,000,000 is type of numbers a quarter, we think we're fundamentally stronger in a market position as you said. So we feel very good about the work Matthew and the team have done. And we as we look at it, we believe that they'll continue to gain share and I think this is a more normalized level and whether it's pull forward or not we'll find out, but it's a more normalized level given those dynamics and one we should be able to build off of, especially as I said earlier, the penetration in the middle market side of our business of whether those clients working up our wealth management in the markets generally plus working across the globe and we've done better work international. So we feel good everything that the team's done, The combination of the corporate and investment banking is very strong. So we don't think this is like an unusually high watermark and we should be able to build from here.

Speaker 5

Okay. Got it. And then one question about wealth management and just client choices in terms of where they're sitting relative to earning NII or earning fees? Where do you sense that the kind of cash versus fully invested is in terms of the wealth management brokerage business? And could that turn to the better or turn to the worse depending on how that mix answer goes?

Speaker 5

Thanks.

Speaker 3

Well, Wealth Management, I think Lindsay, KT and Eric highlight for us regularly just the elevated levels of cash that our clients have. A lot of that is on us and you can see that in our deposit chart. But there's a lot that we've captured in the investment area too, where there a lot of their flows are coming into maybe it's money market funds, maybe the short dated treasuries, but there's a lot of cash at this point. So that would tell you it's supporting the ability to see continued assets under management flows going forward, depending on how the obviously the stock market shakes out over time. But we're all struck by just the sheer amount of cash on the sidelines at this point.

Speaker 5

Okay, got it. All right, thank

Operator

And we'll take our next question from Gerard Cassidy of RBC.

Speaker 8

Alastair, coming back to Slide 8, which is obviously quite impressive on deposits, particularly the upper left hand west you presented. When you go back to maybe 2014 or 2015 and take a look at the deposit levels of your company from, let's say, 2015 to 2019, you just didn't have the growth that you experienced from the end of 2019 through today. Can you guys share with us what drove this meaningful increase in not only excess deposits, but all deposits?

Speaker 2

I think, Gerard, so you've been around long enough to understand some of those dynamics. So as we move through the post financial crisis, we had in terms of that chart, if you looked at it, you had a lot of loans that we ran off because they weren't core loans anymore and kind of troughed out the $900,000,000,000 level and then grew out from there. And in 2015, that's where we started driving responsible growth. It was a call to grow now that we pushed out a lot of crisis and got it behind us. So the loans then start picking up.

Speaker 2

And if you remember back then, I think we had almost $100,000,000,000 if I remember right. And if you looked at the slide on loans in the non line of business loans are $200,000,000,000 or something like that, and it's down to 10. So think about that dimension. So as we ran that down and could grow, we could overcome it. And so then on the growth and loan side, it's driven by discipline where we want to play on card business is getting it positioned right now.

Speaker 2

We could start to push from there, whether it's on home equity business, on the auto loan business. And on the commercial side, it was we had less issues after financial crisis in commercial, but kind of getting through all that, it was getting to the credit quality we wanted and a source of great growth for us from 2010 and beyond has been we've probably gone from, I don't know, dollars 20,000,000,000 $30,000,000,000 of outstanding loans in the international part of Matthews business and GCIB to almost $100,000,000,000 type of numbers. So our expansion of our international capabilities and done with great credit work by Jeff Green and the team and Bruce Thompson team. So put all that together, that's a long side. On the deposit side, it really started with a focus that began really prior to in the middle of financial crisis beyond where we said we're going to go for core checking accounts and consumer primary checking accounts, drive customer satisfaction, drive organic growth and not care about the number of sales as much as the net growth and net sales.

Speaker 2

And as the team, Dean and Tong, over time and then Aaron and Holly now have continued to push that, adding 1,000,000 ish net new checking accounts all core. We've gone from 60% core to 92%. We've gone from customer satisfaction to the highest levels ever in the mid-80s top 2 box, etcetera, etcetera, attrition down to lowest ever, preferred rewards kicked in. And all that has led to higher and higher balance retention per account and then also more accounts and so we've probably grown in the consumer from I think around $300,000,000,000 at the beginning of the 2010, 2011 to now at $900,000,000,000 Now there's economic growth and economy growth, but that's way outsized. And that's what's driven the real value of the deposit franchise.

Speaker 2

And then wealth management, again, after Merrill putting it together and then driving that core aspects between the team there has kept us up to $300,000,000,000 that's from $200,000,000 something pre pandemic and probably less than that equals $200,000,000 at the time of the merger. So all these things are just part of the GTS business investments that have driven those products. So that spread is high and growing again, which is kind of counterintuitive to the narrative that one of your colleagues mentioned earlier, which is leave aside all the quantitative tightening all the straight and all the stuff that's supposed to happen. Quarter after quarter, we're now growing the amount of deposits over the top of the loans and the loans hopefully will kick back in and grow a little faster, but they still won't use a lot of those balances up. And so we feel very good about that position.

Speaker 2

And those deposits, as you can see on the bottom of Page 8, on left hand side, all in cost is 193 basis points against the Fed funds rate of 5.5 percent in the rate of change in those deposit prices have flattened out to be very modest quarter over linked quarter. And that's just a tremendous leverage for the company.

Speaker 8

Very helpful, Brian. Thank you. Ending as a follow-up, I think Alistair, you pointed to that your CGT1 ratios is Basel III ending 1 in as originally proposed you're very comfortable with it. Can you guys share with us what's the latest and we all read about the watering down of Basel III ending? Do you guys have a sense when we may actually see a final proposal?

Speaker 8

Could it get kicked into next year possibly?

Speaker 3

Look, we don't have an update on the timing yet, Gerard. We're in the same place you are. We're kind of waiting for the rules to come out. And we're still listening for updates from the Fed Chair and the Vice Chair and we'll wait till we see those come out.

Speaker 2

The key is to remember that we're sitting even under the current interpretation we told you earlier on without any modifications, we're sitting on an up CET1 nominal amount, dollars 197,000,000,000 that exceeds what we need for the increase in RWA under the current version of the rules proposed. Anything that changes in that would be positive, Gerard. So we don't need to retain capital to meet those standards. We don't so we're off and running.

Speaker 8

Appreciate it, Brian. Thank you.

Speaker 2

I believe that's one more question.

Operator

Yes. We'll take that question from Jim Mitchell of Seaport Global.

Speaker 2

Good morning, Jim. Hey, good morning. Good morning. Sorry. Maybe just one last follow-up on that last question from Gerard.

Speaker 2

If Basel III is reduced as Powell suggested, is it with limited loan growth just more likely to be put towards buybacks or do you see opportunities beyond just loan growth, whether it's building growing the trading balance sheet or are there other opportunities to deploy that capital to drive growth? Just curious how you deploy that? Well, number 1, our primary interest is to use the capital to support our customer businesses. So you've seen that happen in the markets business. As we said, it was one of the best quarters in a decade, 1st quarters.

Speaker 2

That is a multi year process of building up not only the balance sheet and capital committed to business, but importantly also the investment systems and technology and risk management and other things, they continue to make money almost every trading day over the last several years. So that's where we'd like to use it, supporting that business, supporting loan business, supporting all the businesses. The reality is outside of the capital markets business, then you go to loan growth and that and the kind of loan growth in mid single digits that doesn't eat a lot of the capital up. So then it's just there to be returned. And so we got 2 basic phenomena.

Speaker 2

1 is we store housed a bunch of capital. If you think about the last few years between the changes in CCAR a few years ago that changed the capital dimension, then the proposed rules and then now whatever happens with them. So they were sort of sit in the pandemic before that we were sitting on a fair amount of capital that should be released over time here. And then secondly, the question will be what those rules are going forward. And then thirdly, what do you need to support the business, which again, that's our primary responsibility, but generally that is a modest amount of capital.

Speaker 2

And so most of our desire is to is really deploy more expenses and technology investments and we've gone from $3,000,000,000 to 3 $800,000,000 in annual technology investments across the last couple of years, more branches. But that's more of an expense question than a capital question. Right, right. Okay. Thanks a lot.

Speaker 2

All right. I think that's all we correct? Okay. While we wrap it up here, thank you for your time and attention. This quarter marks another quarter of strong organic growth across every business has continued this quarter.

Speaker 2

Good fees and what we call fees and commissions in the Wealth Management Business, Investment Banking and Trading. NII continues to outperform what we told you last quarter for the quarter. Q1, we rolled that into 2nd quarter and we expect continued performance in that as we go through the trough and meet the higher second half of the year. We continue to manage expenses, volume and the inflation rate and we start with strong capital and liquidity and a strong balance sheet. So we are our team did a great job this quarter and we look forward to talking to you next quarter.

Speaker 2

Thank you.

Operator

This does conclude the Bank of America earnings announcement. You may now disconnect. And everyone, have a great day.

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Earnings Conference Call
Bank of America Q1 2024
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