Q2 2026 Bank of America Corp Earnings Call

July 14, 2026

Speaker #2: Please stand by. Your meeting is about to begin. Hello, and welcome, everyone, joining today's Bank of America earnings announcement. At this time, all participants are in listen-only mode.

Operator: Hello and welcome everyone joining today's 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. To register to ask a question at any time, please press star one on your telephone keypad. Please note this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Lee McEntire, Bank of America. Please go ahead.

Speaker #2: Later, you will have the opportunity to ask questions during the question-and-answer session. To register to ask a question at any time, please press *1 on your telephone keypad.

Speaker #2: Please note this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Lee McEntire, Bank of America.

Speaker #2: Please go ahead.

Speaker #3: Thank you. Good morning, everyone, and thank you for joining us to talk through our second quarter results on what is a busy bank earnings day.

Lee McEntire: Thank you. Good morning, everyone, and thank you for joining us to talk through our Q2 results in what is a busy bank earnings day. As always, the earnings release and presentation are posted on the investor relations section of bankofamerica.com, and we'll reference those materials during the call. Before we begin, a quick reminder that during the call, we may make forward-looking statements and refer to non-GAAP financial measures. These measures reflect management's current views and are subject to risks and uncertainties, which are outlined along with the relevant GAAP reconciliations in our earnings materials and our SEC filings on our website. With that, I'll turn the call over to Brian Moynihan, our CEO.

Speaker #3: As always, the earnings release and presentation are posted on the Investor Relations section of bankofamerica.com, and we will reference those materials during the call.

Speaker #3: Before we begin, a quick reminder that during the call, we may make forward-looking statements and refer to non-GAAP financial measures. These measures reflect management's current views and are subject to risks and uncertainties, which are outlined, along with the relevant GAAP reconciliations, in our earnings materials and our SEC filings on our website.

Speaker #3: With that, I'll turn the call over to Brian Moynihan, our CEO.

Speaker #4: Good morning, and thank you for joining us. Once again, our team delivered strong second quarter results, extending the momentum of the past several quarters.

Brian Moynihan: Good morning, and thank you for joining us. Once again, our team delivered strong Q2 results, extending a momentum of the past several quarters. Our revenue grew 15% year-over-year to $31.6 billion. Our net income was $9.1 billion, up 27% from last year. Our EPS increased 34% to $1.21 a share. Our results show organic growth, operating leverage, and efficiency ratio improvement in every business segment. Along the bottom of slide 2, you can see the progress against several of our key financial metrics for the firm. For the quarter, we delivered 6.6% operating leverage, and our efficiency ratio improved to 59%. We generated return on tangible common equity of 17%. In short, organic growth was broad-based and coupled with operating leverage, which translated into stronger returns on both equity and assets.

Speaker #4: Our revenue grew 15% year over year to $31.6 billion. Our net income was $9.1 billion, up 27% from last year. Our EPS increased 34% to $1.21 per share.

Speaker #4: Our results show organic growth, operating leverage, and efficiency ratio improvement in every business segment. Along the bottom of slide 2, you can see the progress against several of our key financial metrics for the firm.

Speaker #4: For the quarter, we delivered 6.6% operating leverage, and our efficiency ratio improved to 59%. We generated a return on tangible common equity of 17%. In short, organic growth was broad-based, and, coupled with operating leverage, translated into stronger returns on both equity and assets.

Speaker #4: Slide 3 shows the contributions and growth of each business segment. Every business segment contributed to our year-over-year growth. Average deposits and loan balances continued to grow, supported by healthy client engagement.

Brian Moynihan: Slide 3 shows the contributions and growth of each business segment. Every business segment contributed to our year-over-year growth. Average deposits and loan balances continued to grow, supported by healthy client engagement. Revenue and net income increased in every business segment. Each segment generated operating leverage. Each segment improved its efficiency ratio, and each segment demonstrated the benefits of its scale. Together, those results drive stronger returns across the company. Let me touch on a few earnings highlights from slide 4, starting with revenue. Revenue growth was broad-based, led by NII, Investment Banking, Wealth Management fees, and sales and trading revenue. First, net interest income. It continued to perform well. On an FTE basis, NII was approximately $16.2 billion, up 9% over last year's Q2. This is driven by the strength of our core lending and deposit-gathering franchises.

Speaker #4: Revenue and net income increased in every business segment. Each segment generated operating leverage. Each segment improved its efficiency ratio. And each segment demonstrated the benefits of its scale.

Speaker #4: Together, those results drive stronger returns across the company. Let me touch on a few earnings highlights from slide 4, starting with revenue. Revenue growth was broad-based, led by NII, investment banking, wealth management fees, and sales and trading revenue.

Speaker #4: First, net interest income. It continued to perform well. On an FTE basis, NII was approximately $16.2 billion, up 9% over last year's second quarter.

Speaker #4: This is driven by the strength of our quarterly lending and deposit-gathering franchises. It also includes our lending and our Global Markets business, and the impact thereof.

Brian Moynihan: It also includes our lending in our Global Markets business and the impact thereof. We also have added the benefit of ongoing repricing with lower yielding assets and repayment of higher cost funding. Second, our fee-based businesses delivered exceptional results, translating into 22% non-interest income growth. Wealth Management, Investment Banking, and Markets all benefit from healthy client activity in favorable capital markets conditions. Merrill, the Private Bank, advisors drove the 18% growth in investment brokerage fees. Investment banking fees increased 50% year-over-year to more than $2.1 billion. Sales and trading generated $7.2 billion in revenue, up 33%. Third, we managed cost while we continued to invest in a franchise. Our brand, our people, our technology, and our AI-enabled productivity. Asset quality also remains stable and consistent with the strong underwriting discipline that has characterized our company for many years.

Speaker #4: We have also benefited from ongoing pricing with lower-yielding assets and the repayment of higher-cost funding. Second, our fee-based businesses delivered exceptional results, translating into 22% non-interest income growth.

Speaker #4: Wealth management, investment banking, and markets all benefited from healthy client activity in favorable capital market conditions. Merrill and the Private Bank advisors drove the 18% growth in investment brokerage fees.

Speaker #4: Investment banking fees increased 50% year over year, to more than $2.1 billion, while sales and trading generated $7.2 billion in revenue, up 33%.

Speaker #4: Third, we managed costs while we continued to invest in our franchise, our brand, our people, our technology, and our AI-enabled productivity. As to quality, it also remained stable and consistent, with the strong underwriting discipline that has characterized our company for many years.

Speaker #4: Finally, capital generation and capital returns to investors remained strong. We returned $8 billion to you through dividends and share repurchases this quarter. We ended the quarter with common equity Tier 1 capital of nearly $202 billion, and a common equity Tier 1 ratio of 11.2%.

Brian Moynihan: Finally, capital generation and capital returns to investors remain strong. We've returned $8 billion to you through dividends and share repurchase this quarter. We ended the quarter with Common Equity Tier 1 capital of nearly $202 billion and a Common Equity Tier 1 ratio of 11.2%. The economic backdrop remains very constructive, as slide 5 illustrates. Last week, our research team raised its 2026 US GDP growth forecast to 2.2%. They also have global growth expected to remain steady at 3.2% in 2026 and grow to 3.5% in 2027. As noted on the slide, consumer spending has recently expanded and continued to outperform our expectations. The slide reflects 5% growth in year-over-year spending for H1, the spending picked up during Q2, and now is running at 6% plus year-over-year comparison.

Speaker #4: The economic backdrop remains very constructive, as slide 5 illustrates. Last week, our research team raised the 2026 U.S. GDP growth forecast to 2.2%. They also have global growth expected to remain steady at 3.2% in '26 and grow to 3.5% in '27.

Speaker #4: As noted on the slide, consumer spending has recently expanded and continued to outperform our expectations. While the slide reflects 5% growth in year-over-year spending for the first half, the spending picked up during the second quarter and now and during the second quarter, and now is running at 6%-plus year-over-year comparison.

Speaker #4: So overall, the U.S. economy has proved more durable than expected, supported by a strong consumer, ongoing AI-driven investments across the board, and easing energy costs. However, inflation and tighter monetary policy remain key risks.

Brian Moynihan: Overall, the US economy has proved more durable than expected, supported by the strong consumer, ongoing AI-driven investments across the board, and easing energy costs, though inflation, tighter monetary policy remain key risks. Before I turn it over to Alastair, I want to bring your attention to a couple slides. First, we have our digital slides in the appendix. In addition, we added a slide on AI. It is slide 20, which shows how our over 200,000 teammates are actively using AI-enabled capabilities across our company. These range from productivity tools to more advanced agentic workflows and coding support. Our associates are generating more than 400,000 prompts a day. As of last week, we had over 300 AI use cases approved. All of which have good economics, of which 114 are live generative AI use cases.

Speaker #4: Before I turn it over to Alastair, I want to bring your attention to a couple of slides. First, we have our digital slides in the appendix.

Speaker #4: In addition, we added AI a slide on AI. It's slide 20, which shows how our over 200,000 teammates are actively using AI-enabled capabilities across our company.

Speaker #4: These range from productivity tools to more advanced agentic workflows and coding support. Our associates are generating more than 400,000 prompts a day, and as of last week, we had over 300 AI use cases approved— all of which have good economics—of which 114 are live generative AI use cases.

Speaker #4: Thirty-four of those cases are fully implemented, and we see new capabilities coming on every week. These tools are designed to help our customer relationship management prepare more thoroughly for the client meetings.

Brian Moynihan: 34 of those cases are fully implemented, and we see new capabilities coming on every week. These tools are designed to help our customer relationship managers prepare more thoroughly for the client meetings. Our bankers automate the research and presentation materials. Our developers code more efficiently, and all our teammates improve productivity, consistency, and client service while creating significant opportunities ahead of us. I am going to turn it over to Alastair. Alastair.

Speaker #4: Our bankers automate the research and presentation materials. Our developers code more efficiently. And all our teammates improve productivity, consistency, and client service, while creating significant opportunities ahead of us.

Speaker #4: I'm going to turn it over to Alastair. Alastair?

Speaker #5: Thanks, Brian. I'm going to pick up on slide 6 and start with the balance sheet, where you can see it remained a source of strength.

Alastair Borthwick: Thanks, Brian. I am going to pick up on slide six and start with the balance sheet, where you can see it remained a source of strength, and we continued to support client activity across the franchise. Our ending assets were steady at $3.5 trillion. Steady compared to Q1, primarily reflecting lower securities balances replaced by loan growth and global markets activity. We maintained strong liquidity and funding while we optimized our balance sheet, and we supported all that with diversified funding and healthy client-driven growth. When you look at regulatory capital, we remain in a strong position with our CET1 ratio stable at 11.2%, and that remains well ahead of our 10% minimum ratio. Tier 1 common equity grew to nearly $202 billion, while our RWA increased to $1.8 trillion, driven by loan growth and capital markets activity. Supplementary leverage remains strong and well above our minimums.

Speaker #5: And we continue to support client activity across the franchise. Our ending assets were steady at $3.5 trillion—steady compared to the first quarter—and primarily reflected lower securities balances replaced by loan growth and global markets activity.

Speaker #5: We maintained strong liquidity and funding while we optimized our balance sheet, and we supported all that with diversified funding and healthy, client-driven growth. When you look at regulatory capital, we remain in a strong position, with our CET1 ratio stable at 11.2%, which remains well ahead of our 10% minimum ratio.

Speaker #5: Tier 1 common equity grew to nearly $202 billion, while our RWA increased to $1.8 trillion, driven by loan growth and capital markets activity. Supplementary leverage remained strong and well above our minimums.

Speaker #5: When we turn to slide 7, you can see deposits remain a key competitive advantage and a source of strength for our company. Average deposits were $2.02 trillion, up $49 billion or 2.5% from a year ago, and importantly, included non-interest-bearing growth of $19 billion, up 4%.

Alastair Borthwick: We turn to slide seven. You can see deposits remain a key competitive advantage and a source of strength for our company. Average deposits were $2.02 trillion, up $49 billion or 2.5% from a year ago. Importantly, included non-interest-bearing growth of $19 billion, up 4%. This marks our 12th consecutive quarter of average deposit growth, and growth was primarily driven by global banking, where deposits increased 8% year over year, reflecting continued client engagement and operating account growth. Q2 saw muted sequential growth in average deposits because it was impacted by typical seasonal tax-related outflows. Otherwise, underlying client activity remains healthy and on track with our expectations. Importantly, our deposit base remains highly diversified across consumer, wealth, commercial, and corporate clients, providing a stable and attractive funding advantage. Our strong liquidity and funding position means we do not need to change chase rate-sensitive balances.

Speaker #5: This marks our 12th consecutive quarter of average deposit growth, and growth was primarily driven by Global Banking, where deposits increased 8% year over year, reflecting continued client engagement and operating account growth.

Speaker #5: The second quarter saw muted sequential growth in average deposits, because it was impacted by typical seasonal tax-related outflows. Otherwise, underlying client activity remains healthy and on track with our expectations.

Speaker #5: Importantly, our deposit base remains highly diversified across consumer, wealth, commercial, and corporate clients, providing a stable and attractive funding advantage. Our strong liquidity and funding position means we don't need to chase rate-sensitive balances, and with other relationship values like rewards, digital capabilities, and security features, it allows us to offer customers attractive rates and grow balances.

Alastair Borthwick: With the other relationship values like rewards, digital, and security features, it allows us to offer customers attractive rates and grow balances. We continue to see growth in both interest-bearing and non-interest-bearing balances. As shown in the upper right, rate paid was modestly lower this quarter, led by consumer deposits of 48 basis points on $957 billion in balances. Favorable balance moves. Turning to slide eight, loan growth remains strong and broad-based. Average loans and leases increased to $1.2 trillion, up $88 billion or 8% from a year ago. Ending loans were also $1.22 trillion, up $71 billion or 6%, marking the ninth consecutive quarter of both average and ending loan growth. Commercial lending continues to lead growth, with average commercial loans increasing to $733 billion, up $75 billion or 11% from a year ago.

Speaker #5: And we continued to see growth in both interest-bearing and non-interest-bearing balances. As shown in the upper right, rate paid was modestly lower this quarter, led by consumer deposits of 48 basis points, at $957 billion in balances.

Speaker #5: So, favorable balance moves. Turning to slide 8, loan growth remains strong and broad-based. Average loans and leases increased to $1.2 trillion, up $88 billion, or 8%, from a year ago.

Speaker #5: Ending loans were also $1.22 trillion, up $71 billion or 6%, marking the ninth consecutive quarter of both average and ending loan growth. Commercial lending continues to lead growth, with average commercial loans increasing to $733 billion, up $75 billion or 11% from a year ago.

Speaker #5: And we've seen growth both domestically as well as internationally, as illustrated by the chart at the bottom right of slide 8. Additionally, commercial growth has broadened away from the global markets activity that we saw last year.

Alastair Borthwick: We've seen growth both domestically as well as internationally, illustrated by the chart at the bottom right of slide eight. Additionally, commercial growth has broadened away from the global markets activity that we saw last year. Consumer loans increased 3% year over year, led by growth in securities-based lending and credit card balances. Credit card grew 4% year over year as we increased marketing and enhanced product offerings. The combination of first and second lien mortgage balances remains relatively stable, reflecting elevated rates, and included the ninth consecutive quarter of average home equity growth. These trends reflect healthy client activity across both commercial and consumer businesses, and they demonstrate the benefits of our diversified lending franchise. Turning to slide nine, net interest income continues to perform well despite a modestly lower short rate environment, which impacted variable rate asset yields.

Speaker #5: Consumer loans increased 3% year over year, led by growth in securities-based lending and credit card balances. Credit card grew 4% year over year, as we increased marketing and enhanced product offerings.

Speaker #5: The combination of first and second lien mortgage balances remains relatively stable, reflecting elevated rates and including the ninth consecutive quarter of average home equity growth.

Speaker #5: These trends reflect healthy client activity across both commercial and consumer businesses, and they demonstrate the benefits of our diversified lending franchise. Turning to Slide 9, net interest income continues to perform well, despite a modestly lower short-rate environment, which impacted variable-rate asset yields.

Speaker #5: NII on an FTE basis was approximately $16.2 billion and increased $253 million from the first quarter, and $1.3 billion, or 9%, from a year ago.

Alastair Borthwick: NII on an FTE basis was approximately $16.2 billion, an increase $253 million from Q1 and $1.3 billion or 9% from a year ago. On a year-over-year basis, growth was driven by higher loan and deposit balances, fixed rate asset repricing, and global markets related activity. This was partially offset by the impact of lower average short-term rates. We've seen steady improvement now since Q2 2024, when NII has grown from $13.9 billion to now $16.2 billion. Net interest yield was 2.08%. That's up 1 basis point from Q1 and 14 basis points from a year ago, reflecting favorable asset and liability mix and loan and deposit growth, partly offset by global markets balance sheet growth.

Speaker #5: On a year-over-year basis, growth was driven by higher loan and deposit balances, fixed-rate asset repricing, and global markets-related activity. This was partially offset by the impact of lower average short-term rates.

Speaker #5: We've seen steady improvement now since the second quarter of '24, when NII has grown from $13.9 billion to now $16.2 billion. Net interest yield was 2.08%.

Speaker #5: That's up 1 basis point from Q1, and 14 basis points from a year ago, reflecting favorable asset and liability mix and loan and deposit growth, partly offset by Global Markets balance sheet growth.

Speaker #5: Bank of America's banking book remains asset-sensitive, and on a dynamic deposit basis, a 100 basis point parallel shift above the forward curve is expected to increase NII by $1 billion over the next 12-month period.

Alastair Borthwick: Bank of America's banking book remains asset sensitive, and on a dynamic deposit basis, a 100 basis point parallel shift above the forward curve is expected to increase NII by $1 billion over the next 12-month period. Looking ahead on NII expectations, in January, we told you to expect 5% to 7% full year NII growth. In April, we raised that full year range to be 6% to 8%. We now expect full year 2026 NII growth to be at the upper end of that 6% to 8% range, supported by anticipated loan and deposit growth, fixed rate asset repricing, and balance sheet optimization. This assumes modest loan and deposit growth in H2 of the year, and it's based on the current forward curve, which has one 25 basis point rate hike in September.

Speaker #5: Looking ahead on NII expectations, in January we told you to expect 5% to 7% full-year NII growth. Then, in April, we raised that full-year range to 6% to 8%.

Speaker #5: We now expect full-year 2026 NII growth to be at the upper end of that 6% to 8%, driven by loan and deposit growth, fixed-rate asset repricing, and balance sheet optimization.

Speaker #5: And this assumes modest loan and deposit growth in the second half of the year, and it's based on the current forward curve, which has one 25 basis point rate hike in September.

Speaker #5: Overall, NII remains a significant contributor to earnings growth and reflects the core franchise advantages of our scale and diversified balance sheet. Non-interest expense on slide 10 was approximately $18.6 billion, up roughly $100 million from the first quarter and $1.4 billion from the second quarter of '25, reflecting continued investment in technology, sales teams, financial centers, and brand marketing.

Alastair Borthwick: Overall, NII remains a significant contributor to earnings growth and reflects the core franchise advantages of our scale and diversified balance sheet. Non-interest expense on slide 10 was approximately $18.6 billion, up roughly $100 million from Q1, and $1.4 billion from Q2 2025, reflecting continued investment in technology, sales teams, financial centers, and brand marketing. It also includes higher activity related costs that come from trading in our global markets business, particularly in our overseas markets. With those investments, we generated 660 basis points of operating leverage and improved our efficiency ratio to 59%, highlighting the performance of the franchise and the return on our investments. AI-enabled tools are now more embedded in workflows across operations, risk, finance, technology, and our client-facing teams.

Speaker #5: And it also includes higher activity-related costs that come from trading in our Global Markets business, particularly in our overseas markets. With those investments, we generated 660 basis points of operating leverage and improved our efficiency ratio to 59%, highlighting the performance of the franchise and the return on our investments.

Speaker #5: AI-enabled tools are now more embedded in workflows across operations, risk, finance, technology, and our client-facing teams. That's helped reduce manual work, improve speed, and enhance consistency for clients and teammates.

Alastair Borthwick: That's helped reduce manual work, improve speed, and enhance consistency for clients and teammates. On our Q1 earnings call in April, we told you we expected full year operating leverage of more than 200 basis points. Operating leverage for H1 2026 has now exceeded 450 basis points. With that H1 performance and our continued expectations for a strong H2, we now expect full year operating leverage to be in the range of 300 to 400 basis points. Turning to slides 11 and 12, you can see credit quality remains stable and consistent with the strong underwriting discipline that's characterized our portfolio for many years. Provision expense was approximately $1.4 billion. Net charge-offs were also $1.4 billion, and both were largely unchanged from Q1. Consumer card charge-offs and delinquencies improved both year-over-year and quarter-over-quarter.

Speaker #5: On our first-quarter earnings call in April, we told you we expected full-year operating leverage of more than 200 basis points. Operating leverage for the first half of 2026 has now exceeded 450 basis points.

Speaker #5: So, with that first-half performance and our continued expectations for a strong second half, we now expect full-year operating leverage to be in the range of 300 to 400 basis points.

Speaker #5: Turning to slides 11 and 12, you can see credit quality remains stable and consistent with the strong underwriting discipline that has characterized our portfolio for many years.

Speaker #5: Provision expense was approximately $1.4 billion. Net charge-offs were also $1.4 billion, and both were largely unchanged from Q1. Consumer card charge-offs and delinquencies improved both year over year and quarter over quarter.

Speaker #5: Commercial credit also remained solid, with CRE improvement offset by some isolated corporate and commercial lending losses. Reservable criticized commercial exposures declined by approximately $2.3 billion from Q1 to roughly $22 billion, driven primarily by CRE improvement.

Alastair Borthwick: Commercial credit also remains solid, with CRE improvement offset by some isolated corporate and commercial lending losses. Reservable criticized commercial exposures declined by approximately $2.3 billion from Q1 to roughly $22 billion, driven primarily by CRE improvement. Non-performing loans remain stable at approximately $5.8 billion, and we recorded a modest reserve release. Overall, our portfolio remains well-positioned, supported by strong client fundamentals and disciplined risk management. Turning to slide 13, now we get into the business segments. Consumer Banking delivered another strong quarter, combining solid financial performance with continued investment in growth, innovation, and client engagement. Over the past few months, we refreshed our rewards program, that's generating more than 2 million enrollments since the late May relaunch. We also launched one of our largest consumer marketing campaigns around the FIFA World Cup.

Speaker #5: Non-performing loans remained stable, at approximately $5.8 billion, and we recorded a modest reserve release. Overall, our portfolio remains well-positioned, supported by strong client fundamentals and disciplined risk management.

Speaker #5: Turning to slide 13, we now get into the business segments. Consumer Banking delivered another strong quarter, combining solid financial performance with continued investment in growth, innovation, and client engagement.

Speaker #5: Over the past few months, we refreshed our rewards program, and that's generated more than 2 million enrollments since the late May relaunch. We also launched one of our largest consumer marketing campaigns around the FIFA World Cup.

Speaker #5: We expanded our financial center network in new and growth markets, introduced new card products, and deployed new AI-enabled tools designed to enhance both the client and teammate experience.

Alastair Borthwick: We expanded our financial center network in new and growth markets, introduced new card products, and deployed new AI-enabled tools designed to enhance both the client and teammate experience. All of these investments help to strengthen the franchise and drive organic growth. Net income increased 10% year-over-year to approximately $3.3 billion, while revenue rose 5% to $11.3 billion. Through strong expense discipline, we generated our fifth consecutive quarter of positive operating leverage, maintained a strong 51% efficiency ratio, and delivered a 29% return on allocated capital. With regard to client activity, our deposit franchise remains a key competitive advantage. Average deposits rose to $957 billion, our fifth consecutive quarter of year-over-year growth. Client engagement was also strong, with record checking account balances, 162,000 net new checking accounts, and card spending up 9% year-over-year to $266 billion.

Speaker #5: All of these investments helped to strengthen the franchise and drive organic growth. Net income increased 10% year over year to approximately $3.3 billion, while revenue rose 5% to $11.3 billion.

Speaker #5: Through strong expense discipline, we generated our fifth consecutive quarter of positive operating leverage, maintained a strong 51% efficiency ratio, and delivered a 29% return on allocated capital.

Speaker #5: With regard to client activity, our deposit franchise remains a key competitive advantage. Average deposits rose to $957 billion, our fifth consecutive quarter of year-over-year growth.

Speaker #5: Client engagement was also strong, with record checking account balances, 162,000 net new checking accounts, and card spending up 9% year over year to $266 billion.

Speaker #5: We continue to deepen relationships across the enterprise, and consumer investment assets reached a record $640 billion, up 18% year over year, supported by strong market levels and net client flows.

Alastair Borthwick: We continued to deepen relationships across the enterprise. Consumer investment assets reached a record $640 billion, up 18% year-over-year, supported by strong market levels and net client flows. Digital engagement remains a clear differentiator, with roughly 50 million active digital users, more than 24 million active Erica users, and digital sales representing 70% of total sales. New AI capabilities have improved service, increased efficiency, and allowed teammates to focus on higher-value client interactions. Finally, consumers remain resilient as average deposit investment balances and spending all showed linked-quarter increases. Additionally, consumer credit quality remains strong and in line with expectations, reflecting the strength of our customer base and our disciplined approach to risk management. Overall, Consumer Banking continues to demonstrate the power of our scale, digital leadership, and relationship-based model, positioning the business for sustainable and attractive long-term growth.

Speaker #5: Digital engagement remains a clear differentiator, with roughly 50 million active digital users, more than 24 million active Erica users, and digital sales representing 70% of total sales.

Speaker #5: New AI capabilities have improved service, increased efficiency, and allowed teammates to focus on higher-value client interactions. Finally, consumers remain resilient, as average deposit, investment balances, and spending all showed linked-quarter increases.

Speaker #5: Additionally, consumer credit quality remains strong and in line with expectations, reflecting the strength of our customer base and our disciplined approach to risk management.

Speaker #5: Overall, Consumer Banking continues to demonstrate the power of our scale, digital leadership, and relationship-based model—positioning the business for sustainable and attractive long-term growth.

Speaker #5: Turning to slide 14, GWIM delivered another outstanding quarter, highlighted by record revenue and pre-tax income, expanded profit margins, and continued client growth. Clients continue to consolidate more of their financial lives with Bank of America.

Alastair Borthwick: Turning to slide 14, GWIM delivered another outstanding quarter, highlighted by record revenue and pre-tax income, expanded profit margins, and continued client growth. Clients continue to consolidate more of their financial lives with Bank of America. During the quarter, we added another 6,000 net new affluent households to serve. The continued strong growth in banking relationships and lending balances demonstrates the power of our integrated wealth and banking model. At the same time, both Merrill and the Private Bank continue to attract talented advisors who are drawn to the breadth of our platform and our ability to deliver comprehensive solutions for clients. The franchise continued to benefit from strong advisor productivity, growing digital engagement, and new AI-enabled tools that help advisors prepare for client conversations, identify opportunities, and deliver more personalized advice at scale.

Speaker #5: During the quarter, we added another 6,000 net new affluent households to serve, and the continued strong growth in banking relationships and lending balances demonstrates the power of our integrated wealth and banking model.

Speaker #5: At the same time, both Merrill and the Private Bank continue to attract talented advisors who are drawn to the breadth of our platform and our ability to deliver comprehensive solutions for clients.

Speaker #5: The franchise continued to benefit from strong advisor productivity, growing digital engagement, and new AI-enabled tools that help advisors prepare for client conversations, identify opportunities, and deliver more personalized advice at scale.

Speaker #5: Net income for the segment increased 42% year over year to $1.4 billion, while revenue grew 16% to a record $6.9 billion, driven by higher asset management fees, strong flows, higher market valuations, and higher NII.

Alastair Borthwick: Net income for the segment increased 42% year-over-year to $1.4 billion, while revenue grew 16% to a record $6.9 billion, driven by higher asset management fees, strong flows, higher market valuations, and higher NII. With good expense discipline, we generated another quarter of positive operating leverage and saw pre-tax margins expand to more than 27%, demonstrating the scalability of this business. Client balances reached a record $4.9 trillion, up 12% from a year ago. Assets under management grew 17% year-over-year to $2.3 trillion, supported by approximately $14 billion of AUM flows this quarter and $78 billion of AUM flows over the past four quarters. Loans grew $13 billion or 5% linked quarter to $277 billion, driven by custom and securities-based lending demand. Overall, GWIM continued to demonstrate the strength of our advice-led, relationship-based model and remains well-positioned for sustainable growth.

Speaker #5: With good expense discipline, we generated another quarter of positive operating leverage and saw pre-tax margins expand to more than 27%, demonstrating the scalability of this business.

Speaker #5: Client balances reached a record $4.9 trillion, up 12% from a year ago. Assets under management grew 17% year over year to $2.3 trillion, supported by approximately $14 billion of AUM flows this quarter and $78 billion of AUM flows over the past four quarters.

Speaker #5: Also, loans grew $13 billion, or 5% linked quarter, to $277 billion, driven by custom and securities-based lending demand. Overall, GWIM continued to demonstrate the strength of our advice-led, relationship-based model and remains well-positioned for sustainable growth.

Speaker #5: Moving to our Commercial and Corporate client-facing businesses and Global Banking on slide 15, where Global Banking delivered strong results in the second quarter, reflecting healthy client activity, near-record investment banking performance, strong treasury service revenue, and continued balance sheet growth.

Alastair Borthwick: Moving to our commercial and corporate client-facing businesses in Global Banking on slide 15, where Global Banking delivered strong results in the second quarter, reflecting healthy client activity, near record investment banking performance, strong treasury service revenue and continued balance sheet growth. Client engagement remained broad-based with activity across capital markets, strategic transactions, liquidity management. We continued our program of growth investments, including technology modernization, digital infrastructure, and AI-related initiatives. We're also using AI-enabled tools to help bankers accelerate their research, prepare materials, and identify relevant client opportunities more efficiently. Revenue increased 10% year-over-year to $6.2 billion, while net income grew 20% to more than $2 billion. Investment banking was a particular highlight. Total corporate investment banking fees, excluding self-led transactions, increased 50% year-over-year to more than $2.1 billion, reflecting strength across debt underwriting, advisory, and equity underwriting.

Speaker #5: Client engagement remained broad-based, with activity across capital markets, strategic transactions, and liquidity management. We continued our program of growth investments, including technology modernization, digital infrastructure, and AI-related initiatives.

Speaker #5: We're also using AI-enabled tools to help bankers accelerate their research, prepare materials, and identify relevant client opportunities more efficiently. Revenue increased 10% year over year to $6.2 billion, while net income grew 20% to more than $2 billion.

Speaker #5: Investment banking was a particular highlight. Total corporate investment banking fees, excluding self-led transactions, increased 50% year over year to more than $2.1 billion, reflecting strength across debt underwriting, advisory, and equity underwriting.

Speaker #5: Average loans increased 7% to $413 billion, while average deposits increased 8% to $652 billion, demonstrating continued franchise growth and client confidence. Credit quality remained solid, and returns remained healthy, with a 15% return on allocated capital.

Alastair Borthwick: Average loans increased 7% to $413 billion, while average deposits increased 8% to $652 billion, demonstrating continued franchise growth and client confidence. Credit quality remained solid, and returns remained healthy with a 15% return on allocated capital. Turning to slide 16, Global Markets delivered an exceptional quarter. Excluding DVA, net income was $2.7 billion, up 70% from a year ago. Sales and trading revenue, excluding DVA, increased 33% to $7.2 billion. Equities delivered a record $3.6 billion of revenue, up 70%, driven by client financing activity and strong trading performance in derivatives and cash. FICC generated $3.5 billion, its strongest quarter in more than a decade. Growth was broad-based across the franchise. Domestically, our revenue in the US increased 31%, while our international business delivered a 38% improvement, with Asia Pacific as the standout. This is generally consistent with our Investor Day messaging of continuing our improved performance internationally.

Speaker #5: Turning to slide 16, global markets delivered an exceptional quarter. Excluding DVA, net income was $2.7 billion, up 70% from a year ago. Sales and trading revenue, excluding DVA, increased 33% to $7.2 billion.

Speaker #5: Equities delivered a record $3.6 billion of revenue, up 70%, driven by client financing activity and strong trading performance in derivatives and cash. FIC generated $3.5 billion, its strongest quarter in more than a decade.

Speaker #5: Growth was broad-based across the franchise. Domestically, our revenue in the US increased 31%, while our international business delivered a 38% improvement, with Asia Pacific as the standout.

Speaker #5: And this is generally consistent with our investor day messaging of continuing our improved performance internationally. But perhaps what stands out most is the consistency of our performance.

Alastair Borthwick: Perhaps what stands out most is the consistency of our performance. We've now delivered 17 consecutive quarters of year-over-year sales and trading revenue growth and 14 consecutive quarters of year-over-year net income growth. Combined with 16% operating leverage and a 20% return on allocated capital, these results reflect the strength of our client franchise, diversified platform, and disciplined execution. Client activity remains strong, and the connectivity between Markets, Global Banking, and Wealth and Investment Management continues to create value for clients. Investments in technology and AI are helping teams deliver insights faster, operate more efficiently, and further strengthen our competitive position. This was a record quarter built on scale, client engagement, and consistent execution across the franchise. Moving to all other on slide 17.

Speaker #5: Because we've now delivered 17 consecutive quarters of year-over-year sales and trading revenue growth, and 14 consecutive quarters of year-over-year net income growth, and combined with 16% operating leverage and a 20% return on allocated capital, these results reflect the strength of our client franchise, diversified platform, and disciplined execution.

Speaker #5: Client activity remained strong, and the connectivity between Markets, Global Banking, and Wealth and Investment Management continues to create value for clients. Investments in technology and AI are helping teams deliver insights faster, operate more efficiently, and further strengthen our competitive position.

Speaker #5: So this was a record quarter built on scale, client engagement, and consistent execution across the franchise. Moving to 'All Other' on slide 17, we recorded a $292 million net loss in the quarter, which is larger than a year ago, with no significant drivers to note.

Alastair Borthwick: We recorded a $292 million net loss in the quarter, which is larger than the year ago, with no significant drivers to note, and we reported an overall tax rate of 21.5%, consistent with our full-year guidance. In closing, Q2 reflects the strength of our diversified operating model. We produced double-digit revenue growth and more than $9 billion of net income, with EPS growth of 34% and return on tangible common equity of 17%. We also delivered strong operating leverage while continuing to invest in the franchise and supporting our clients. Across the company, clients continued to invest, transact, and grow. Activity remains healthy across lending, payments, investment banking, Markets, and Wealth Management, including technology, digital infrastructure, and AI-related opportunities. We also see meaningful opportunities to continue using AI and automation ourselves to improve productivity, strengthen client engagement, and support disciplined growth across the company.

Speaker #5: And we reported an overall tax rate of 21.5%, consistent with our full-year guidance. In closing, the second quarter reflects the strength of our diversified operating model.

Speaker #5: We produced double-digit revenue growth and more than $9 billion of net income, with EPS growth of 34% and return on tangible common equity of 17%.

Speaker #5: We also delivered strong operating leverage, while continuing to invest in the franchise and support our clients. Across the company, clients continued to invest, transact, and grow.

Speaker #5: Activity remains healthy across lending, payments, investment banking, markets, and wealth management, including technology, digital infrastructure, and AI-related opportunities. We also see meaningful opportunities to continue using AI and automation ourselves to improve productivity, strengthen client engagement, and support disciplined growth across the company.

Speaker #5: So, taken together, these trends simply reinforce our confidence in the long-term earnings power of the franchise and our ability to deliver responsible growth and attractive returns for shareholders.

Alastair Borthwick: Taken together, these trends simply reinforce our confidence in the long-term earnings power of the franchise and our ability to deliver responsible growth and attractive returns for shareholders. With that, Leo, let's open it up and we'll see what questions we can answer.

Speaker #5: And with that, Leo, let's open it up and see what questions we can answer.

Speaker #1: Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2.

Operator: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question, and we'll pause for just a moment to allow everyone a chance to join the queue. Thank you. Our first question comes from Chris McGratty with KBW. Please go ahead. Your line is open.

Speaker #1: Once again, that is star 1 to ask a question, and we'll pause for just a moment to allow everyone a chance to join the queue.

Speaker #1: Thank you. Our first question comes from Chris McGrady with KBW. Please go ahead, your line is open.

Speaker #2: Oh, great. Good morning, thanks for the question. Notice the deposit discipline in the quarter. Alastair, I'm interested in your thoughts about pricing in a higher-for-longer environment.

Chris McGratty: Oh, great. Good morning. Thanks for the question. Notice the deposit discipline in the quarter. Alastair, I'm interested in your thoughts about pricing in a higher for longer environment. I know you didn't change the full year NII guide, but your deposit pricing outperformed some of your peers this quarter. Any comments on the near-term outlook would be great. Thanks.

Speaker #2: I know you didn't change the full-year NII guide, but your deposit pricing outperformed some of your peers this quarter. Any comments on the near-term outlook would be great.

Speaker #2: Thanks.

Speaker #3: Yeah, so I'd say we kind of just kept nudging NII a little bit higher as we've gone through the year. First from that 5 to 7, up to the 6 to 8, and then more recently saying we're probably going to be at the top end of that range.

Alastair Borthwick: Yeah. I'd say we kind of just kept nudging NII a little bit higher as we've gone through the year, first from that 5% to 7% up to the 6% to 8%, then more recently saying we're probably going to be at the top end of that range. We've tried to express our confidence in the momentum of NII. Some of that comes from the deposit gathering. I think you know we've got a lot of liquidity. We're not loaned up at this point. We've got $800 billion of excess between our cash and securities over our loans, that really allows us to concentrate on our strategy. Our strategy is very clear. We're trying to grow clients and operating accounts. That's the highest quality growth. It's the highest quality clients, because when you get that operating account, it's key to the financial lives.

Speaker #3: So, we've tried to express our confidence in the momentum of NII, and some of that comes from the deposit gathering. I think you know we've got a lot of liquidity; we're not loaned up at this point.

Speaker #3: So we've got 800 billion of excess between our cash and securities over our loans. And that really allows us to concentrate on our strategy.

Speaker #3: Our strategy is very clear. We're trying to grow clients and operating accounts. That's the highest-quality growth. It's the highest-quality clients. Because when you get that operating account, it's key to their financial lives.

Speaker #3: So when consumer puts up 162,000 of net new checking accounts, or when we grow non-interest bearing for 7 consecutive quarters, that's what helps us to drive the non-interest bearing up 4%.

Alastair Borthwick: When consumer puts up 162,000 of net new checking accounts, or when we grow non-interest-bearing for seven consecutive quarters, that's what helps us to drive the non-interest-bearing up 4%. The lower rate paid is really about mix, Chris. We're competing out there for deposits like everyone else. We compete tooth and nail to get deposits where we can. At the end of the day, our strategy is about relationship value, all the things around digital and security and rewards that we talk about. It's that favorable mix of growing the non-interest-bearing that makes a difference.

Speaker #3: So the lower rate paid is really mixed, Chris. We're competing out there for deposits like everyone else. We compete tooth and nail to get deposits where we can.

Speaker #3: But at the end of the day, our strategy is about relationship value, all the things around digital and security and rewards that we talk about.

Speaker #3: And it's that favorable mix of growing the non-interest-bearing that makes a difference.

Speaker #2: Okay, that's helpful. Appreciate that. And then on the operating leverage conversation and the new slide, I'm interested in the 200 to 300 basis points plus of operating leverage that you talked about in November.

Chris McGratty: Okay. That's helpful. I appreciate that. On the operating leverage conversation in the new slide, I'm interested, the 200 to 300 basis points plus of operating leverage that you talked about in November, you're clearly off to a great start. I'm interested in kind of the sustainability. Obviously, the comps will be a factor, the influence that AI might have on that over time.

Speaker #2: You're clearly off to a great start. I'm interested in the sustainability; obviously, the comps will be a factor, but also the influence that AI might have on that over time.

Speaker #3: Well, there are two elements to that, I think. First, obviously, we said at Investor Day the sustainable kind of thing that we're aiming for is something like 200 to 300.

Alastair Borthwick: Well, there are two elements to that, I think. First, obviously, we said at Investor Day, the sustainable kind of thing that we're aiming for is something like 200 to 300. Right now we're outperforming that. We've had a terrific H1 at 450 basis points. That's what's giving us the confidence for the full year to say it's going to be above the range. AI plays a role, I think, in two ways. The first one is on the revenue side. There's obviously a big AI theme going on in the world. We're leading in investment banking and global markets around capital raising, financing that massive capital investment and infrastructure build around the world. That's helping us there. You're asking a question that's really about sustainability going forward. Can it help us with our own operations? The answer is yes.

Speaker #3: Right now, we're outperforming that. We've had a terrific first half at 450 basis points, so that's what's giving us the confidence for the full year to say it's going to be above the range.

Speaker #3: AI plays a role, I think, in two ways. The first one is on the revenue side. There's obviously a big AI theme going on in the world.

Speaker #3: We're leading in investment banking and global markets around capital raising and financing, that massive capital investment and infrastructure build around the world. So that's helping us there.

Speaker #3: And then you're asking a question that's really about sustainability going forward. Can it help us with our own operations? The answer is yes. That's why we put that slide in.

Alastair Borthwick: That's why we put that slide in. If you go to the slide, it's slide number 20, you just take a look. Remember, we've been at this for a little while now, you can begin to see now in these general purpose productivity tools or the tools that are aimed at specific functions like the bankers or the wealth professionals or the software developers. You can see what we're doing there. There's another layer of AI on top of that accesses a lot of the company. On the right-hand side, here's what's going to come out of that, we believe. Growth, efficiency, risk management, and resiliency. That's what we're trying to make sure we're updating you on the AI as we're going through.

Speaker #3: So, if you go to the slide—it's slide number 20—and just take a look. Remember, we've been at this for a little while now.

Speaker #3: But you can begin to see now, in these general-purpose productivity tools, or the tools that are aimed at specific functions—like for the bankers, or the wealth professionals, or the software developers—you can see what we're doing there.

Speaker #3: And then there's another layer of AI on top of that, which accesses a lot of the company. So on the right-hand side, here's what's going to come out of that, we believe.

Speaker #3: Growth, efficiency, risk management, and resiliency. So that's what we're trying to make sure we're updating you on the AI as we're going through. And at this point, we've got when we put it at the top of the page, just so you could see it, but you can see the number of approved model cases at this point.

Alastair Borthwick: At this point, we can put it at the top of the page just so you could see it, you can see the number of approved model cases at this point is 300. You can see the number we've got in here that we're using, 114. This is going to be something for the future we're just working our way through it.

Speaker #3: It's 300. You can see the number we've got in here that we're using, 114. So this is going to be something for the future, and we're just working our way through it.

Speaker #2: Understood. Thanks so much.

Chris McGratty: Understood. Thanks so much.

Speaker #1: Thank you. We'll now move on to Glenn Schorr with Evercore. Your line is now open.

Operator: Thank you. We'll now move on to Glenn Schorr with Evercore. Your line is now open.

Speaker #3: Good morning, Glen.

Alastair Borthwick: Morning, Glenn.

Speaker #1: And Mr. Shore. Mr. Shore, please check your mute switch. Your line is open. We'll move on to Ken Oozden with Autonomous Research. Your line is now open.

Operator: Mr. Schorr.

Alastair Borthwick: You there?

Alastair Borthwick: Mr. Schorr, please check your mute switch. Your line is open. We'll move on to Ken Usdin with Autonomous Research. Your line is now open.

Operator: Mr. Schorr, please check your mute switch. Your line is open. We'll move on to Ken Usdin with Autonomous Research. Your line is now open.

Speaker #4: Hi, thanks a lot. Hey Alastair, just on the positive operating leverage point—I think you've made it very clear that the comps are getting a little harder in the second half because of the ramp you had last year, starting with the NII and also markets.

Ken Usdin: Hi. Thanks a lot. Hey, Alastair, just on the positive operating leverage point, I think you've made it very clear about the comps getting a little harder in the H2 because of the ramp you had last year, starting with the NII and also markets. Can you just help us put it into some kind of context? Obviously, with 300 and 660 basis points of leverage and now talking to a full year of 300 to 400, just how do we kind of box the operating leverage potential for the H2 as we get into this kind of tougher comps, albeit with the good top-line revenue growth continuing? Thanks.

Speaker #4: Can you just help us put it into some kind of context? Obviously, with 300 and 660 basis points of leverage, and now talking to a full year of 300 to 400, just how do we kind of box the operating leverage potential for the second half as we get into these tougher comps, albeit with good top-line revenue growth continuing?

Speaker #4: Thanks.

Speaker #3: Yeah. So we're offering the $300 to $400 [million] range, recognizing that we've already booked $450 [million] for the first half. So that's good. And then we're just trying to give you a range, Ken, that allows you to kind of work backwards, because as you point out, in the second half of last year, the NII went up more than in the first half.

Alastair Borthwick: Yeah. We're offering the 300 to 400, recognizing that we've already booked 450 for the H1, that's good. We're just trying to give you a range, Ken, that allows you to kind of work backwards because as you point out, in the H2 of last year, the NII went up more than the H1. We think that'll happen this year as well, but it might not. Just the numbers are bigger this year, the percentages just change a little bit. Remember, Q2 last year was a slower quarter for investment banking for the entire industry.

Speaker #3: Now, we think that'll happen this year as well, but it might not. Just the numbers are bigger this year, so the percentage has changed a little bit.

Speaker #3: And then remember, second quarter last year was a slower quarter for investment banking for the entire industry. So, if you think about it, if we put up $2.1 billion of investment banking this year, up 50%, if you kind of sustain that relative to what we did in the third quarter of last year, which was $2 billion or so, you just don’t get the same kind of uplift in the second half.

Alastair Borthwick: You think about it, if we put up $2.1 billion of investment banking this year, up 50%, if you kind of sustain that relative to what we did in Q3 of last year, which was $2 billion or so, you just don't get the same kind of uplift in the H2. That's what we've got our minds on. Otherwise, as you can imagine, business conditions are very good. We're trying to maximize operating leverage where we can.

Speaker #3: So that's what we've got our minds on. Otherwise, as you can imagine, the business conditions are very good, and we're trying to maximize operating leverage where we can.

Speaker #4: Okay, got it. And you mentioned balance sheet optimization from here. Can you talk about where you have room to continue to optimize, notably?

Ken Usdin: Okay. Got it. You mentioned balance sheet optimization from here. Can you talk about where you have that room to continue to optimize well, across the balance sheet, I guess on both the asset side and the liability side as you focus more on that? Thanks.

Speaker #4: Well, across the balance sheet, I guess, on both the asset side and the liability side, as you focus more on that? Thanks.

Speaker #3: Well, there are really two places, I think, that you'll see it. The first one is, we've talked about the fact that we believe we can improve net interest yield over time.

Alastair Borthwick: Well, there are really two places I think that you'll see it. The first one is we've talked about the fact that we believe we can improve net interest yield over time. We've done that. You can see we're at 208 now. We're up from 194 a year ago. That's been a contributor to some of the NII gains. We've talked about on prior calls, we still feel like we carry some repo, some institutional CDs, that over time we're just continuing to pay down. If those are invested at the Fed, we're not capturing a lot of spread. It doesn't do anything for NII. It actually hurts NIIY. It also ties up a little bit of capital.

Speaker #3: We've done that. You can see we're at 208 now—up from 194 a year ago. So that's been a contributor to some of the NII gains.

Speaker #3: But we've talked about on prior calls, we still feel like we carry some repo institutional CDs that over time we're just continuing to pay down.

Speaker #3: If those are invested at the Fed, we're not capturing a lot of spread. It doesn't do anything for NII; it actually hurts NIY. But it also ties up a little bit of capital.

Speaker #3: So, as we continue to pay that down—and I think you'll see more of that happening in the second half of this year—that'll free up more capital.

Alastair Borthwick: As we continue to pay that down, and I think you'll see more of that happening in the H2 of this year. That'll free up more capital. It'll help us on the return on tangible common equity as well. We're sticking to that program. We'll have a pretty good opportunity in the H2. We're looking forward to that.

Speaker #3: It'll help us on the return on tangible common equity as well. So we're sticking to that program. We'll have a pretty good opportunity in the second half.

Speaker #3: We're looking forward to that.

Speaker #5: Just note, there's no constraint on the growth alones or the core deposits etc. So that's all can grow because it's all going to get good returns and things like that.

Brian Moynihan: Just note that there's no constraint on the growth of loans or core deposits, et cetera. That all can grow because it's all going to get good returns and things like that. It's really a question of sort of the centralized security portfolios, the term debt, the repos. Alastair said a lot of the buildup that came because of the rules getting flipped around is now we're through that and on the other side of it.

Speaker #5: It's really a question of sort of the centralized security portfolio is a term debt, the repo is Alastair said, a lot of the build-up that came because of the rules getting flipped around is now we're through that and on the other side.

Speaker #4: Okay. Got it. Thanks, guys. Appreciate it.

Ken Usdin: Okay, got it. Thanks, guys. Appreciate it.

Speaker #1: Thank you. We'll move on to Mainon Gosalya with Morgan Stanley. Your line is open.

Operator: Thank you. We'll move on to Manan Gosalia with Morgan Stanley. Your line is open.

Speaker #6: Hey, good morning. Alastair, I know you outlined higher rates as a positive. If you could talk a little bit about what happens if the rate environment changes here, because we're getting a lot of changes overall.

Manan Gosalia: Hey, good morning. Alastair, I know you outlined higher rates as a positive. If you can talk a little bit about if the rate environment changes here because we're getting a lot of changes overall. Would that impact the NII guide and as we think about just markets NII overall as well given that prime brokerage and some of the other businesses are doing better, if there's any offset to getting to the high end of the 6% to 8% NII guide.

Speaker #6: Would that impact the NII guide and as we think about just markets NII overall as well, given that prime brokerage and some of the other businesses are doing better if there's any offset to getting to the high end of the 6 to 8 percent NII guide?

Speaker #3: Well, first, welcome to coverage. Nice to have you on the call. Thank you. Second, yeah, I mean, if we've got one rate hike in the curve, it's in September.

Alastair Borthwick: Well, first, welcome to coverage. Nice to have you on the call. Thank you.

Manan Gosalia: Thank you.

Alastair Borthwick: Second, yeah, we've got one rate hike in the curve. It's in September. Its impact this year is pretty modest because you're really only capturing anything in October, November, and December. We will obviously adjust pricing in each of our segments for any rate hike. Net, net, we expect that to be a positive. That's in our guide right now where we're saying it was five to seven, then it was six to eight. Now we're saying it's going to be at the top end of that range, and that's with that hike. Now, I think generally speaking, because the banking book is liability insensitive, that's the predominant benefit. The markets business is slightly liability sensitive, so that's a slight offset. Net, net, it's a positive for us, and that's what we're trying to communicate.

Speaker #3: So its impact this year is pretty modest because you're really only capturing anything in October, November, and December. We will, obviously, adjust pricing in each of our segments for any rate hike.

Speaker #3: But net, net, net, we expect that to be a positive. So that's in our guide right now, where we're saying it was 5 to 7, then it was 6 to 8.

Speaker #3: Now we're saying it's going to be at the top end of that range—and that's with that hike. Now, I think, generally speaking, because the banking book is liability insensitive, that's the predominant benefit.

Speaker #3: But the markets business is slightly liability sensitive. So that's a slight offset. But net, net, net, it's a positive for us. And that's what we're trying to communicate.

Speaker #6: Got it. All right. Thank you. And apologies if I missed it, but as you think about loan growth in the back half of the year and you think about, I guess, just middle markets CNI growth, how is that trending?

Manan Gosalia: Got it. All right. Thank you. Apologies if I missed it, but as you think about loan growth in H2 and you think about I guess just middle market C&I growth, how is that trending, and what do you expect overall as we get into H2?

Speaker #6: And what do you expect overall as we get into the back half of the year?

Speaker #3: Yeah. So, if we look at the middle market, we're sort of growing kind of like commercial loans overall. They're growing around 8% or so.

Alastair Borthwick: Yeah. If we look at the middle market, we're sort of growing kind of like commercial loans overall. They're growing around 8% or so. Middle market's kind of in there. Larger cap corporates are in there. The growth looks pretty good, we would say, on the commercial side. If you go back now, I think it's over nine or 10 quarters we've been growing loans at $20 billion or so per quarter. 7% last year, full year, 8% this year. The commercial growth's there. We don't necessarily see that changing. Feels to us like we're in a good environment for loan growth. Then just keep half an eye also on card, where Holly laid out a plan to say we want to get back towards 5% type card growth. We were at 1%, then 2%, then 3%. You can see this quarter we're at 4%.

Speaker #3: Middle markets kind of in there. Larger cap corporates are in there. So the growth looks pretty good. We would say in the commercial side.

Speaker #3: And if you go back now, I think it's over nine or ten quarters. We've been growing loans at $20 billion or so per quarter.

Speaker #3: Seven percent last year, full year; eight percent this year. So, the commercial growth's there. We don't necessarily see that changing. It feels to us like we're in a good environment for loan growth.

Speaker #3: And then just keep half an eye also on card where Holly laid out a plan to say we want to get back towards 5% type card growth.

Speaker #3: We were at 1%, then 2, then 3. You can see this quarter we're at 4%. So some good news on the consumer side. And then things like securities-based lending have been pretty positive as well.

Alastair Borthwick: Some good news on the consumer side. Then things like securities-based lending have been pretty positive as well just with the way the markets have performed and what our wealth management clients want to do. We remain pretty constructive on loan growth in the H2. No changes there.

Speaker #3: Just with the way the markets have performed and what our wealth management clients want to do. So we remain pretty constructive on loan growth in the second half.

Speaker #3: No changes there.

Speaker #6: Great. Thank you.

Manan Gosalia: Great. Thank you.

Speaker #1: Thank you. We'll move next to Ben Gerlinger with Citi. Your line is open. Please go ahead.

Operator: Thank you. We'll move next to Ben Gerlinger with Citi. Your line is open. Please go ahead.

Speaker #7: Hi, good morning. I was curious—I get that the updated guide, closer to the higher end on NII, includes the forward hike potential. I was curious, does that also incorporate a little bit more productivity on the average earning asset mix?

Ben Gerlinger: Hi. Good morning. I was curious. I get that the updated guide closer to the higher end of NII includes the forward hike potential. I was curious, does that also incorporate a little bit more productivity on the average earning asset mix? I know you guys have alluded to a little bit more productivity down the road, and I get that that takes time. Just kind of curious, is the guidance based on a static balance sheet or the continuation of a little bit more loans in the average earning assets?

Speaker #7: I know you guys have alluded to a little bit more productivity down the road. And I get that that takes time just kind of curious.

Speaker #7: Is the guidance based on a static balance sheet, or a continuation of a little bit more loans in the average earning assets?

Speaker #3: Yep. So, Ben, also welcome to coverage. Thanks for joining. Yeah, the updated guide essentially assumes the following: first, modest deposit growth similar to what we’ve been seeing.

Alastair Borthwick: Yeah. Ben, also, welcome to coverage. Thanks for joining. Yeah, the updated guide essentially assumes the following. First, modest deposit growth similar to what we've been seeing. Second, good continued loan growth in the H2 of the year, similar to what we've been seeing. We haven't really changed our perspectives on either of those. We'll get the benefit from some fixed rate asset repricing, get a little bit more of that in the H2 than the H1. Otherwise it's mostly balance sheet gains. What I described in terms of balance sheet efficiency, I would think about that as being more about net interest yield and less about NII. Okay?

Speaker #3: Second, good continued loan growth. In the second half of the year, similar to what we've been seeing. So we haven't really changed our perspectives on either of those.

Speaker #3: We'll get the benefit from some fixed-rate asset repricing—get a little bit more of that in the second half than the first half. But otherwise, it's mostly balance sheet gains.

Speaker #3: And then what I described in terms of balance sheet efficiency, I would think about that as being more about net interest yield and less about NII.

Speaker #3: Okay?

Speaker #7: Gotcha. That's helpful. If I could do a follow-up in terms of operating leverage, I understand that you increased the guide for the full year this year.

Ben Gerlinger: Got you. That's helpful. If I could do a follow-up in terms of operating leverage. I get that you increased the guide for the full year this year. When you think about just the higher revenue production that you kind of alluded to Do you run the risk of potentially under-investing? I get that you're probably ahead of peers across every major category of AI and technology and is being a bit more digital. If you have more revenue, do you think you could potentially speed up the spending so it pulls forward into this year, reducing that leverage?

Speaker #7: When you think about, just at a higher revenue production that you kind of alluded to, do you run the risk of potentially underinvesting? I get that you're probably ahead of peers across every major category of AI and technology.

Speaker #7: And just being a bit more digital. But if you have more revenue, do you think you could potentially speed up the spending so it pulls forward into this year, reducing that leverage?

Speaker #3: Well, I think we are spending at a good clip overall in technology, and also dedicating a lot of time in the company towards careful examination, implementation, catalyst, people working to understand the projects in AI.

Brian Moynihan: Well, I think we are spending at a good clip overall in technology and also dedicating a lot of time in the company towards careful examination implementation catalyst, people working to understand the projects in AI. We give you the outline on slide 20. I think there's productivity increases. There's a lot of spending. We're going to be spending more of it. Whether that increases expenditures or technology development dramatically or not, it really has to do with a couple things. One is the shifting of spending towards it. Secondly, even the coding process has become more and more efficient using these tools. The same amount of money in 2027 will get us more code, for lack of a better term, in 2028. We're driving everything as hard as we can.

Speaker #3: We give you the outline on slide 20. So, I think there's productivity increases. There's a lot of spending. We're going to be spending more of it. Whether that increases expenditures or technology development dramatically or not really has to do with a couple of things.

Speaker #3: One is, there's shifting of spending towards it. And then secondly, even the coding process has become more and more efficient using these tools. So the same amount of money in '27 will get us more code, for lack of a better term, in '28.

Speaker #3: So we're driving everything as hard as we can, and so our focus on operating leverage—and we just told you we raised us above the normalized range.

Brian Moynihan: Our focus on operating leverage, and we just told you we raised us above the normalized range. We're continuing to invest in the places that grow the business, especially around the consumer business. Think financial centers and new markets done in a rational, full market build-out basis, not on a one-off, one-at-a-time basis, building out cities we're not in. We continued to drive the marketing capabilities of the firm, and our consumer scores have now reached all-time highs. We invested heavily in our rewards program, which goes to some of your other colleagues' ability to cement relationships with great deposit mix and the result cost of funds. We're spending. I don't think you'll see a major change in our methodology of how we think about spending.

Speaker #3: And then we're continuing to invest in the places that grow the business, especially around the consumer business. Think financial centers and new markets done in a rational full market build-out basis, not on a one-off one-at-a-time basis building out cities we're not in.

Speaker #3: We have continued to drive the marketing capabilities of the firm, and our consumer scores have now reached all-time highs. And then we invested heavily in our rewards program, which goes to some of your other colleagues' ability to cement relationships.

Speaker #3: With a great deposit mix and the resulting cost of funds, so we're spending—I don't think you'll see a major change in our methodology of how we think about spending.

Speaker #3: A lot of the incremental expense growth from the second quarter of this year to last year was due to incentives and BCNE via clearing expenses. If that keeps going, we'll be happy—well, not very happy, because that means the revenue's got to grow.

Brian Moynihan: A lot of the incremental expense growth from Q2 this year, last year was due to incentives and BCNE clearing expenses. If that keeps going, we'll be very happy because that means the revenue's got to grow. If the revenue slows down, expense growth rate will slow down, and it will have a different type of operating leverage that Alastair described earlier.

Speaker #3: If the revenue slows down, it'll expense growth for it will slow down and it will have a different type of operating leverage that Alistair described earlier.

Speaker #6: Perfect. Thank you.

Ben Gerlinger: Sure. Thank you.

Speaker #1: Thank you. We'll now move on to Erica Najerian with UBS. The line is now open.

Operator: Thank you. We'll now move on to Erika Najarian with UBS. The line is now open.

Speaker #8: Hi. Good morning. So the investor feedback so far is that they feel that the net interest income guide is conservative. So maybe I just reunpack the number of questions that you've gotten already on this, Alistair.

Erika Najarian: Hi. Good morning. The investor feedback so far is that they feel that the net interest income guide is conservative. Maybe I'll just re-unpack the number of questions that you've gotten already on this, Alastair. The H1 of the year, NII growth is up 9%. Clearly, the H2 of the year is tougher comps, right, which you're saying would get you within the range. We just wanted to understand. You mentioned that included in your guide is modest deposit growth, good loan growth, improving card growth, which obviously is coming at a better yield. Are we getting earning asset growth for the H2 of the year, but not much NIM expansion? I guess we're just trying to think about the jumping off point that will slow your NII growth from the 9% that you've printed for the H1 of the year.

Speaker #8: So the first half of the year, NII growth is up 9. Clearly, the second half of the year is tougher comps, right, which you're saying would get you within the range.

Speaker #8: But we just wanted to understand—you mentioned that, included in your guide, is modest deposit growth, good loan growth, and improving card growth, which obviously is coming at a better yield.

Speaker #8: So are we getting the are we getting earning asset growth for the second half of the year, but not much NIM expansion? I guess we're just trying to think about the jumping-off points to sort of that will slow your NII growth from the 9% that you've printed for the first half of the year.

Speaker #3: Yep. Okay. Well, the first thing I should say is it's not slowing it much. Second, I think it's actually helpful, I think, to just lay out—if you look at the four quarters of 2025 just sequentially, and then lay out essentially 2026—what you see is most all of the NII build last year was in the second half of the year.

Alastair Borthwick: Yeah. Okay. Well, the first thing I should say is it's not slowing it much.

Erika Najarian: Yeah

Alastair Borthwick: I think it's actually helpful to just lay out. If you look at the four quarters of 2025 just sequentially.

Erika Najarian: Yeah

Alastair Borthwick: Lay out essentially 2026, what you see is most all of the NII build last year was in the H2 of the year. We're just up against tougher comps. That's all. It's not more complicated than that. We just got to stick doing what we're doing. We got to keep growing the loans. We got to keep growing the deposits with particular focus on operating accounts and non-interest-bearing. We'll get some benefit from fixed rate asset repricing as we do. We've invested in global markets with their balance sheet. That's a net positive, but I don't expect that to be anything particularly big in the H2 of the year because markets, generally speaking, is sort of at a good run rate right now. We're talking about 8% or 9%. I don't know. They're both very good.

Speaker #3: So we're just up against tougher comps, that's all. It's not more complicated than that. So we just have to stick to doing what we're doing.

Speaker #3: We got to keep growing the loans. We got to keep growing the deposits with particular focus on operating accounts and non-interest bearing. And then we'll get some benefit from fixed-rate asset repricing as we do.

Speaker #3: We've invested in global markets. Their balance sheet is a net positive, but I don't expect that to be anything particularly big in the second half of the year, because markets, generally speaking, are sort of at a good run rate right now.

Speaker #3: So we're talking about 8% or 9%. I don't know. They're both very good. But we kind of feel like right now, it looks to us more like 8% for the full year, just based on the comps.

Alastair Borthwick: We feel like right now it looks to us like more like 8% for the full year just based on the comps.

Speaker #8: Got it. And my second question is, Brian, you printed a return of 17% on tangible common equity this quarter. Granted, the equities number and the IB numbers are huge.

Erika Najarian: Got it. My second question is, Brian, you printed a return of 17% on tangible common equity this quarter. Granted, the equities number and the IB numbers are huge. I guess a two-part question. Number one, reaffirming that your positive operating leverage being better in a full year but slower in H1 is only due to the seasonal revenue factors that you're taking into account. In theory, if the pipeline continues to be robust in banking and markets, it could be better, right? Second, as you think about a very strong year in terms of returns, are you willing to invest in perhaps slightly lower return than the 16% to 18% target businesses like equities financing, for example, to continue to set yourself up for earnings growth going forward?

Speaker #8: So I guess a two-part question. Number one, just sort of reaffirming that this you're positive operating leverage being better in a full year, but slower in the first half is only due to the seasonal revenue factors that you're taking into account.

Speaker #8: So in theory, if the pipeline continues to be robust in banking and markets, it could be better, right? And second, as you think about sort of a very strong year in terms of returns, are you willing to invest in perhaps slightly lower return than the 16 to 18 percent target businesses like equities financing, for example, to continue to set yourself up for earnings growth going forward?

Speaker #3: So I think, Erica, there are a lot of assumptions and things. Let me just be clear. Return would take us longer to get there. That is in part due to the strong operating of the general businesses that are operating very well, getting good operating leverage—consumer banking, commercial banking—and benefiting from the NII lift, as well as the strong performance in markets.

Brian Moynihan: I think, Erika, there's a lot in assumptions and things. Let me just be clear. The return on tangible common equity was 17%. We thought it would take us longer to get there. That has in part due to the strong operating of the general businesses that are operating very well, getting good operating leverage, consumer banking, commercial banking, and benefiting by the NII lift as well as the strong performance markets. Right now, we see very strong performance this quarter, and we expect it to continue based on the market conditions. The Iran war is fractious, and we can't predict what will happen next in it, and that could affect the market's perception, IPOs, et cetera. Right now, the pipelines are holding very good about that. The loan growth, deposit growth Alastair described. We feel very good about the returns and maintaining those returns.

Speaker #3: Right now, we see very strong performance this quarter, and we expect it to continue based on the market conditions. But the ran wars and fractious, and we can't predict what will happen next in it, and that could affect the market's perception, IPOs, etc.

Speaker #3: But right now, the pipelines are actually very good about that. The loan growth, deposit growth, as Alastair described. So we feel very good about the returns and maintaining those returns.

Speaker #3: But in this current quarter, there was a pretty healthy lift-off of last year. And a strong markets return, as you mentioned. So we're a balanced company.

Brian Moynihan: In this current quarter, there was a pretty healthy lift off of last year in a strong markets return, as you mentioned. We're a balanced company, the other parts are kicking in. The key for everyone to understand is it's all going to come to the bottom line, and that's our goal is to make sure all the NII lift as we march from 190s in NIM up to the 230s which we said we could do, that all that fell the bottom line along the way, and that's what we're driving at. If you look at the expense growth, it's really related to the fee-based businesses and the rest of it's having a very rational amount of expense growth because the efficiency measures, and it's dropping the bottom line, and that's why the earnings growth was 30-plus% EPS. Expect that to continue.

Speaker #3: The other parts are kicking in. The key for everyone to understand is it's all going to come to the bottom line. And that's our goal: to make sure all the NII lift, as we marched from 190s in NIM up to the 230s—which we said we could do—that all that fell to the bottom line along the way.

Speaker #3: And that's what we're driving at. So, if you look at the expense growth, it's really related to the fee-based businesses, and the rest of it is having a very rational amount of expense growth because of the efficiency measures, and it's dropping to the bottom line.

Speaker #3: And that's why the earnings growth was 30-plus percent EPS. So expect that to continue. We're not hiding it from you. We're growing—we're having operating leverage of 660 basis points.

Brian Moynihan: We're not hiding it from you. We're growing. We're having operating leverage of 660 basis points, so we're letting it come to the bottom line. Meanwhile, we're investing heavily in the growth of this company to make sure that we're positioned in the future. Whether we accept lower returning business or not, we always look at all the businesses and say, What can you swap out from low return to higher returning based on the return on tangible common equity metric? Which at 6% ±, we think is the right standard to look at. We think it's what the rating agents look at. We think the people operating below that have to be careful. That's lesson learned from the financial crisis. We expect to be around that level. When people have optimization opportunities, they have to grow the bottom line.

Speaker #3: So we're letting it come to the bottom line, but meanwhile, we're investing heavily in the growth of this company to make sure that we're positioned in the future.

Speaker #3: Whether we accept lower returning business or not, that's we always look at all the businesses and say, "What can you swap out from low return to higher returning based on the return on tangible common equity metric?" Which at 6% plus or minus, we think is the right standard to look at.

Speaker #3: We think it's what the rating agents look at. We think the people operating below that have to be careful. That's lesson learned from the financial crisis.

Speaker #3: So we expect to be around that level. When people have optimization opportunities, they have to grow the bottom line. But if they can grow it with more return, we're pushing them to do that, as well as letting them grow to meet the market demand.

Brian Moynihan: If they can grow it with more return, we're pushing them to do that as well as letting them grow to meet the market demand.

Speaker #8: Got it. Thanks.

Erika Najarian: Got it. Thanks.

Speaker #1: Thank you. We'll now move on to Mike Mayo with Wells Fargo. Your line is now open.

Operator: Thank you. We'll now move on to Mike Mayo with Wells Fargo. Your line is now open.

Speaker #5: Hi. Could you elaborate more on the change in your operating leverage guide? That's quite a big lift there. And you did address the NII—that all falls to the bottom line.

Mike Mayo: Hi. Could you elaborate more on the change in your operating leverage guide? That's quite a big lift there. You did address the NII. That all falls to the bottom line. I get that part, and we get the equities trading going up more. Aside from that, it still seems to be guided quite a bit higher. Your marginal margin or the scalability of your model, I think you've been kind of waiting for this moment when you can layer on more revenues at lower marginal cost. Can you highlight the areas that's impacting that the most?

Speaker #5: I get that part, and we see equities trading going up more. But aside from that, it still seems to be guided quite a bit higher.

Speaker #5: So your marginal margin or the scalability of your model I think you've been kind of waiting for this moment when you can layer on more revenues at lower marginal cost.

Speaker #5: Can you highlight the areas that are impacting that the most?

Speaker #3: Yeah. So Mike, when we got together at Investor Day, we essentially outlined for our shareholders that we felt like the financial model works if we can create 200 basis points of operating leverage from the organic growth and the expense discipline that we expect to put up every cycle.

Brian Moynihan: Yeah. Mike, when we got together at Investor Day, we essentially outlined for our shareholders that we felt like the financial model works if we can create 200 basis points of operating leverage from the organic growth and the expense discipline that we expect to put up every cycle. What we also said is we benefit from fixed rate asset repricing for a period of time here. We kind of felt like what we were prepared to commit for the next three to five years was 200 to 300 basis points of operating leverage. Obviously, we have performed positively and outperformed that in H1 of the year. The two reasons for that are, first, NII just keeps grinding higher. As Brian pointed out, all of that's dropping to the bottom line. That's really powerful.

Alastair Borthwick: Yeah. Mike, when we got together at Investor Day, we essentially outlined for our shareholders that we felt like the financial model works if we can create 200 basis points of operating leverage from the organic growth and the expense discipline that we expect to put up every cycle. What we also said is we benefit from fixed rate asset repricing for a period of time here. We kind of felt like what we were prepared to commit for the next three to five years was 200 to 300 basis points of operating leverage. Obviously, we have performed positively and outperformed that in H1 of the year. The two reasons for that are, first, NII just keeps grinding higher. As Brian pointed out, all of that's dropping to the bottom line. That's really powerful.

Speaker #3: But what we also said is we benefit from fixed-rate asset repricing for a period of time here. So we kind of felt like what we were prepared to commit for the next three to five years was 200 to 300 basis points of operating leverage.

Speaker #3: Obviously, we have performed positively and outperformed that in the first six months of the year. The two reasons for that are first, NII just keeps grinding higher.

Speaker #3: And as Brian pointed out, all of that's dropping to the bottom line, so that's really powerful. And then, second, we had really terrific fee-based performance over the course of the first six months.

Brian Moynihan: Second, we had really terrific fee-based performance over the course of H1. You can see it in assets under management, you can see it in sales and trading, you can see it investment banking. That's really boosted. At some point, you're halfway through the year with 450 basis points of operating leverage, and it's pretty clear we're going to be above 300. We know we've got tougher comps in H2, but it's still a strong H2. When we put that up, we should be in a good place to report full year results. That's what we're aiming at.

Alastair Borthwick: Second, we had really terrific fee-based performance over the course of H1. You can see it in assets under management, you can see it in sales and trading, you can see it investment banking. That's really boosted. At some point, you're halfway through the year with 450 basis points of operating leverage, and it's pretty clear we're going to be above 300. We know we've got tougher comps in H2, but it's still a strong H2. When we put that up, we should be in a good place to report full year results. That's what we're aiming at.

Speaker #3: You can see the NASA's under management. You can see it in sales and trading. You can see it in investment banking. So that's really boosted and at some point, you're halfway through the year with 450 basis points of operating leverage.

Speaker #3: And it's pretty clear we're going to be above 300. So we know we've got tougher comps in the second half, but it's still a strong second half.

Speaker #3: And when we put that up, we should be in a good place to report full-year results. So that's what we're aiming for.

Speaker #5: And did you provide any expense guidance for the year or the second half?

Mike Mayo: Did you provide any expense guidance for the year or H2?

Speaker #3: No, we've largely gone away from that, Mike, for the very simple reason that when you have revenues increase this quickly—and some of them come with brokerage, clearing, and exchange costs, some come with FA incentive costs—it’s really hard for us to just keep updating the expense through the course of the quarter.

Brian Moynihan: No, we've largely gone away from that, Mike, for the very simple reason that when you have revenues increase this quickly, and some of them come with brokerage clearing and exchange costs, some come with FA incentive cost. It's really hard for us to just keep updating the expense through the case of the quarter. Our shareholders have just said, "Look, it's sometimes easier to stick with operating leverage." We found that. I think if you look at the core, the best core measure is probably headcount. Our headcount discipline over the last six quarters has been excellent. It's flat to slightly down. We expect good core expense discipline, and the expense at this point is really going to be based on what happens with revenue. If the revenue isn't there, then the expense will come down.

Alastair Borthwick: No, we've largely gone away from that, Mike, for the very simple reason that when you have revenues increase this quickly, and some of them come with brokerage clearing and exchange costs, some come with FA incentive cost. It's really hard for us to just keep updating the expense through the case of the quarter. Our shareholders have just said, "Look, it's sometimes easier to stick with operating leverage." We found that. I think if you look at the core, the best core measure is probably headcount. Our headcount discipline over the last six quarters has been excellent. It's flat to slightly down. We expect good core expense discipline, and the expense at this point is really going to be based on what happens with revenue. If the revenue isn't there, then the expense will come down. If it sustains where it is currently, you see what it costs to operate the company right now on the fees that we just put up.

Speaker #3: So our shareholders have just said, "Look, it's sometimes easier to stick with operating leverage." We've found that. But I think if you look at the core, the best core measure is probably headcount.

Speaker #3: Our headcount discipline over the last six quarters has been excellent. It’s flat to slightly down. So, we expect good core expense discipline, and the expense at this point is really going to be based on what happens with revenue.

Speaker #3: If the revenue isn't there, then the expense will come down. If it sustains where it is currently, then you see what it costs to operate the company right now on the fees that we just put up.

Brian Moynihan: If it sustains where it is currently, you see what it costs to operate the company right now on the fees that we just put up.

Speaker #5: And then, as a follow-up, going back to Investor Day, I think you were looking for cards to grow 5%. And as you said, it's gone from 1%, 2%, 3%, now 4%.

Mike Mayo: As a follow-up, going back to Investor Day, I think you were looking for cards to grow 5%, and as you said, it's gone from one, two, three, now 4%, that's there. You also were hoping for net new asset growth at 5%. I don't think this quarter the net client flows weren't as good. Just if you could comment on that. Lastly, on commercial loan growth, traditional C&I growth away from the hyperscalers and all that. I'm trying to figure out if that's actually coming back or not. You being across the US is a good guide for that.

Speaker #5: So that's there. But you also were hoping for net new asset growth at 5%, and I don't think this quarter, the net client flows were as good.

Speaker #5: So, if you could just comment on that. And then lastly, on commercial loan growth—traditional commercial and C&I growth—away from the hyperscalers and all that.

Speaker #5: I'm trying to figure out if that's actually coming back or not, and if your being across the US is a good guide for that.

Speaker #3: First, I think you were referring to the Merrill 5% guide, where we said we were aiming for 5% over the course of the next three to five years.

Alastair Borthwick: First, I think you were referring to the Merrill 5% guide, where we said we are aiming for 5% over the course of the next three to five years.

Speaker #5: Yes.

Mike Mayo: Yes.

Speaker #3: It's been seven months. And I think we're off to a good start there. We added net new households. Again, this quarter, this was the best quarter in the last few.

Alastair Borthwick: It's been seven months, and I think we're off to a good start there. We added net new households again this quarter. This was the best quarter in the last few, so that was good. Probably the most important flow is the assets under management flows, where they were up 4%, so we were happy with that. The loans were up 13%, I think it was, year over year. I think what Lindsay and Eric are trying to drive there, what Katy's trying to drive there, is just keep growing the sales force. Well, advisor attrition is now at near historic lows, so we're pretty happy with that. We've got more to do, we know that, over the course of the next three to five years, but I think we feel like we're off to a good start, so we're happy with that.

Speaker #3: So that was good. Probably the most important flow is the assets under management flows, where they were up 4%. So we were happy with that.

Speaker #3: The loans were up 13%, I think it was, year over year. So I think what Lindsay and Eric are trying to drive there, what Katie's trying to drive there, is just keep growing the sales force.

Speaker #3: Well, advisor attrition is now at near historic lows, so we're pretty happy with that. We've got more to do—we know that over the course of the next three to five years.

Speaker #3: But I think we feel like we're off to a good start. So we're happy with that. On the commercial loan growth, yes, it's broader than just an AI theme.

Alastair Borthwick: On the commercial loan growth, yes, it's broader than just an AI theme. The AI theme has helped because there's so much in the way of capital investment going on globally now. When we look at our global banking segments, each of the lines of business, whether it's business banking, the commercial bank, or the corporate bank, they're all contributing. It's very broad-based loan growth at this point. It's consistent loan growth in commercial. That's another reason why we're pretty comfortable with our NII guide for the H2 of the year.

Speaker #3: The AI theme has helped because there's so much in the way of capital investment going on globally now. But if when we look at our global banking segments, each of the lines of business, whether it's business banking, the commercial bank, or the corporate bank, they're all contributing.

Speaker #3: It's very broad-based loan growth at this point. It's consistent loan growth in commercial. So that's another reason why we're pretty comfortable with our NII guide for the second half of the year.

Speaker #5: All right. Thank you.

Mike Mayo: All right. Thank you.

Speaker #2: Thank you. We'll now move on to Gerard Cassidy with RBC, your line is now open.

Operator: Thank you. We'll now move on to Gerard Cassidy with RBC. Your line is now open.

Speaker #6: Hi, Brian. Hi, Alastair. Can you guys take a step back and just give us a sense—what are you seeing in the underwriting area for credit?

Gerard Cassidy: Hi, Brian. Hi, Alastair. Can you guys take a step back and just give us a sense, what are you seeing in the underwriting area for credit? Is there risk ongoing on? Numbers are great for you and your peers. The economy is healthy. What are you guys seeing for the trends there?

Speaker #6: Is there risk ongoing? I mean, numbers are great for you and your peers, the economy's healthy. What are you guys seeing for the trends there?

Speaker #7: Hopefully.

Speaker #3: I'd say, Gerard, overall we see, from what we're underwriting, we stick to our credit knitting, so to speak. It's been consistent. It's been long-term.

Alastair Borthwick: I'd say, Gerard, overall, from what we're underwriting, we stick to our credit knitting, so to speak. It's been consistent. It's been long term. You can see it in the stress test results again that just got issued. In what we do, we maintain that consistency. The nice thing is we can maintain that consistency and actually grow as strong or stronger in the industry, in core middle market areas that you're thinking about, small business, et cetera. We feel very good about that. Do we see some excesses on outside? We always do. A lot of that went to a different market, not in the banking system. Some of that's come back and now they have to do it more on bank lendable terms, so to speak. We're seeing that competitive pressure ease a hair, but then we'll see if it stays that way.

Brian Moynihan: I'd say, Gerard, overall, from what we're underwriting, we stick to our credit knitting, so to speak. It's been consistent. It's been long term. You can see it in the stress test results again that just got issued. In what we do, we maintain that consistency. The nice thing is we can maintain that consistency and actually grow as strong or stronger in the industry, in core middle market areas that you're thinking about, small business, et cetera. We feel very good about that. Do we see some excesses on outside? We always do. A lot of that went to a different market, not in the banking system. Some of that's come back and now they have to do it more on bank lendable terms, so to speak. We're seeing that competitive pressure ease a hair, but then we'll see if it stays that way.

Speaker #3: You can see it in the stress test results again that just got issued. So in what we do, we may take that consistency. And the nice thing is we can maintain that consistency and actually grow a stronger, stronger industry in core middle market areas that you're thinking about small business, etc.

Speaker #3: So we feel very good about that. Do we see some excesses on the outside? We always do. A lot of that went to a different market, not in the banking system.

Speaker #3: Some of that's come back. And now needs to they have to do it more on bank lendable terms, so to speak. So we're seeing that competitive pressure ease a hair.

Speaker #3: But then we'll see if it stays that way. And we're seeing price pressure in some of the more liquid products like auto loans and stuff.

Alastair Borthwick: We're seeing price pressure in some of the more liquid products like auto loans and stuff, and that's why we laid off a little bit is the pricing got very tight, and that happens once in a while. Overall, we feel good that the credit quality is high, the underwriting that we see is high. Some of the impact of more leverage done with loans outside the banking system is mitigated as that practice straightens itself out over time here. We feel very good about the credit quality. It's all going to come down to the economy, and right now our team is very constructive on the economy and unemployment at four two or whatever it is. New claims for unemployment staying low. It's a pretty good place. That's why you're seeing a complete sort of steadiness in our credit cost.

Brian Moynihan: We're seeing price pressure in some of the more liquid products like auto loans and stuff, and that's why we laid off a little bit is the pricing got very tight, and that happens once in a while. Overall, we feel good that the credit quality is high, the underwriting that we see is high. Some of the impact of more leverage done with loans outside the banking system is mitigated as that practice straightens itself out over time here. We feel very good about the credit quality. It's all going to come down to the economy, and right now our team is very constructive on the economy and unemployment at four two or whatever it is. New claims for unemployment staying low. It's a pretty good place. That's why you're seeing a complete sort of steadiness in our credit cost. Importantly, the issues of the moment, whether it was real estate four or five years ago or whether it was private capital lending and all this stuff, just aren't surfacing the way people thought they would.

Speaker #3: And that's why we laid off a little bit as the pricing got very tight. And that happens once in a while. But overall, we feel good that the credit quality is high.

Speaker #3: The underwriting that we see is high. The some of the impact of more leverage done loans outside the banking system is mitigated as that practice straightens itself out over time here.

Speaker #3: And so we feel very good about the credit quality. It's all going to come down to the economy. And right now, our team is fairly very constructive on the economy.

Speaker #3: And unemployment at 4.2 or whatever it is, new claims for unemployment staying low, it's a pretty good place. And so that's why you're seeing a complete sort of steadiness in our credit cost.

Speaker #3: And importantly, the issues of the moment—whether it's real estate, four or five years ago, or whether it was private capital lending and all this stuff—just aren't surfacing the way people thought they would.

Alastair Borthwick: Importantly, the issues of the moment, whether it was real estate four or five years ago or whether it was private capital lending and all this stuff, just aren't surfacing the way people thought they would.

Gerard Cassidy: Very good. Thank you. As a follow-up, I don't know if you guys can frame this out, but AI is such a powerful economic force in this country. Have you guys been able to frame out not in exposure to data center build out, but the second derivative? You wonder two, three, four years from now if AI ever kind of slows down or rolls over. What's the second derivative credit aspect from that? Have you guys given that much thought?

Speaker #7: Well, that's very

Speaker #6: Good, thank you. And then as a follow-up, I don't know if you guys could frame this out, but AI is such a powerful economic force in this country.

Speaker #6: Have you guys been able to frame out not exposure to data center build-out, but the second derivative? Because you wonder, two, three, four years from now, if AI ever kind of slows down or rolls over, what's the second derivative credit aspect from that?

Speaker #6: Have you guys given that much thought?

Brian Moynihan: When we look at the work we do with clients and others, we factor in across all our companies as part of the underwriting work that the team does. They have to factor in the question of what's the impact of AI in the industry and the company, and what'll happen. I think it'll take time, as you said. We continue to watch that. As we look at underlying deals, we're always looking at the credit, the capability, and the earnings power of the underlying tenants, so to speak, that are driving the revenue to the build out. That we keep care on. When we look at the energy build out, we see the demand there. We look at all the factors you're talking about.

Speaker #3: When we look at the work we do with clients and others, we factor it in across all our companies as part of the underwriting work that the team does.

Speaker #3: They have to factor in the question of what’s the impact of AI in the industry and the company, and what will happen. I think it’ll take time, as you said.

Speaker #3: And we continue to watch that. As we look at underlying deals, we're always looking at the credit, the capability, and the earnings power of the underlying tenants, so to speak, that are driving the revenue to the build-out.

Speaker #3: And so that we keep carrying on. And when we look at the energy build-out, we see the demand there. So we look at all the factors you're talking about.

Speaker #3: I think what we've learned is not only what happens outside, but we also see the impact within our company and our ability to use it effectively, relatively quickly.

Brian Moynihan: What we learn from also is not only what happens outside, we see the impact on our company and the ability for us to use it effectively, relatively quickly. It's a very powerful tool. It has great utility. It has to be carefully managed. You have to have your data perfect. You have to have your rules base so it doesn't make mistakes in how you use it. You have to look at processes and not engineer them. We feel very strong about it. We talk to the companies that are in our portfolios of lending to make sure they're active using this so they don't get left behind. On the other hand, they're using it in a responsible way so that they can protect their data and their security and things like that. We feel good about it.

Speaker #3: And so, it's a very powerful tool. It has great utility. It has to be carefully managed. You have to have your data perfect. You have to have your rules-based.

Speaker #3: So it doesn't make mistakes. And how you use it—you have to look at processes, and not try to engineer them. So, we feel very strongly about it.

Speaker #3: And we talk to the companies that are in our portfolios of lending to make sure they're actively using this so they don't get left behind.

Speaker #3: But on the other hand, they're using it in a responsible way so that they can protect their data and their security, and things like that.

Speaker #3: So we feel good about it, and we feel it'll be a powerful force in a place where the American economy will be very successful.

Brian Moynihan: We feel it'll be a powerful force and a place where the American economy will be very successful.

Gerard Cassidy: Thank you, Brian.

Speaker #6: Thank you, Brian.

Speaker #2: Thank you. We'll now move on to Matt O'Connor with Deutsche Bank. Your line is now open.

Operator: Thank you. We'll now move on to Matt O'Connor with Deutsche Bank. Your line is now open.

Speaker #4: Good morning. Just a quick follow-up on an interesting point—the guidance for this year is essentially we have 8%. What does that ex-markets?

Matt O'Connor: Good morning. Just a quick follow-up on net interest income. The guidance for this year is essentially to be up 8%. What is that ex markets?

Alastair Borthwick: I need to take a look. Give me one second. I need to work it back.

Speaker #3: I need to take a look. Give me one second. I need to work it back.

Speaker #4: Okay.

Matt O'Connor: Okay.

Speaker #3: I mean, I can help you with that offline once we finish it up. But it's not going to be a big factor because I think what's going to end up happening is the market's NII is probably pretty stable here.

Alastair Borthwick: Matt, I can help with that offline once we finish it up, but it's not going to be a big factor because I think what's going to end up happening is the markets NII is probably pretty stable here. It could even go down with the rate cut in Q4, but it'll be flat to slightly down is my guess. Most all of the growth is going to come from the global banking books.

Speaker #3: It could even go down with the rate cut in the fourth quarter, but it'll be flat to slightly down, is my guess. So most all of the growth is going to come from the Global Banking books.

Speaker #4: Okay. Yeah, that number would be helpful. I mean, I think on a year-over-year basis, I would think it's up, just given it was going up throughout last year.

Matt O'Connor: Okay. Yeah, that number would be helpful. I think on a year-over-year basis, I would think it's up just given it was going up throughout last year.

Speaker #3: Well, year-over-year will be up because we've put more balance sheet into the business, so we can start to see that. I'm just saying, if you were to look at first quarter, second quarter, kind of expect a similar kind of number in third and fourth.

Alastair Borthwick: Well, year-over-year it'll be up because we've put more balance sheet into the business. We can sort of see that. I'm just saying if you were to look at Q1, Q2, kind of expect a similar kind of number in Q3 and Q4.

Speaker #3: But we don't normally provide the guidance ex-global markets because there's lots of moving pieces that go backwards and forwards. And there's a lot of loans in markets.

Matt O'Connor: Mm-hmm. Okay.

Matt O'Connor: Okay.

Alastair Borthwick: We don't normally provide the guidance ex Global Markets because there's lots of moving pieces that go backwards and forwards, and there's a lot of loans in Global Markets. It gets a little confusing when we strip that out sometimes. You have to think about the presentation there. Bottom line is Global Markets NII, I think it'll be flattish, could be slightly down with a rate hike. That's not the driver of H2 performance of NII.

Speaker #3: So it gets a little confusing when we strip that out sometimes. We have to think about the presentation there. But bottom line is market's NII, I think it'll be flatish.

Speaker #3: Could be slightly down with a rate hike, but that's not the driver of second-half performance for NII.

Speaker #4: Okay, that's helpful. And then, longer term, you talked about NIM grinding higher, and I know this was a while ago, but you talked about a Q3 or Q4 NIM.

Matt O'Connor: Okay, that's helpful. Then longer term, you talked about NIM grinding higher, and I know this was a while ago, but you talked about a 2.3% or 2.4% NIM, obviously, the balance sheet's a lot bigger. There's been some mix shift. Just any updated thoughts on the NIM over time?

Speaker #4: But obviously, the balance sheet's a lot bigger. There's been some mix shift. Just any updated thoughts on the NIM over time?

Speaker #3: Well, we still feel good about that 230 number that we're aiming for. I think when we started, we said it would be two to three years we're inside probably inside a couple of years now to get there.

Alastair Borthwick: Well, we still feel good about that 2.30% number that we're aiming for. I think when we started, we said it would be 2 to 3 years. We're probably inside a couple of years now to get there just based on the progress that we've made. One of the things that's just interesting over there is because we've grown the Global Markets business, which is quite low net interest yield, that has suppressed the overall, if you like. The banking net interest yields have been quite encouraging over the course of the past couple of years. It's been a conscious choice to invest in Global Markets. That's obviously been a good decision, particularly this quarter with the Global Markets businesses up as much as they are. It's less about net interest yield and more about net interest income. At the margin, we're going to get the net interest yield.

Speaker #3: Just based on the progress that we've made. One of the things that's just interesting over there is because we've grown the markets business, which is quite low net interest yield, that has suppressed the overall, if you like.

Speaker #3: The banking net interest yields have been quite encouraging over the course of the past couple of years. So, it's been a conscious choice to invest in markets; that's obviously been a good decision, particularly this quarter.

Speaker #3: With the markets businesses up as much as they are. But it's less about net interest yield and more about net interest income. The margin we're going to get the net interest yield, we know that.

Alastair Borthwick: We know that. We're still confident. We're still on track. We'll get to that 2.30%, and we're 1 year closer now.

Speaker #3: We're still confident. We're still on track. We'll get to that 230. And we're a year closer now.

Speaker #4: Okay. Thank you.

Matt O'Connor: Okay. Thank you.

Speaker #2: Thank you. There are no further questions in the queue. I'd be happy to return the call to Brian Moynihan.

Operator: Thank you. There are no further questions in queue. I'd be happy to return the call to Brian Moynihan.

Speaker #3: I thank all of you for joining us. Consistency is the key. As you look across all our metrics in every area—whether it's NII, fees, etc.—you see that.

Brian Moynihan: I thank all of you for joining us. The consistency is the key as you look across all our metrics in every area, whether it's NII, fees, et cetera. The second thing is to keep in mind that the revenue growth is strong but also very diversified across lots of different businesses, lots of different outcomes. The third to keep in mind is that the credit costs in the company have flattened out at very strong historical levels, and we continue to feel good about the delinquencies and everything that we show you as getting better. If you think about all that, we gave you guidance that we're at the top end of a range in operating leverage, all that backs into a strong H2 ahead of us.

Speaker #3: The second thing is to keep in mind that the revenue growth is strong, but also very diversified across lots of different businesses and lots of different outcomes.

Speaker #3: And the third to keep in mind is that the credit cost in the company has flattened out at very strong historical levels. We continue to feel good about the delinquencies and everything we show you is getting better.

Speaker #3: If you think about that, all that we gave you guidance that we're at the top end of a range in operating leverage. And so, all that backs into a strong second half ahead of us.

Speaker #3: When you think about the atmosphere we operate in, it's a constructive environment, full pipelines in the markets business, strong investor demand for debt and equity.

Alastair Borthwick: When you think about the atmosphere we operate in, it's a constructive environment, full pipelines in the markets business, strong investor demand for debt and equity, commercial lending strengthening and continue broadening out. We continue to see strong consumer spending activity, which at the end of the day shores up the US economy. Our company is well-positioned to be a part of all that growth, we look forward to talking to you next time. Thank you.

Brian Moynihan: When you think about the atmosphere we operate in, it's a constructive environment, full pipelines in the markets business, strong investor demand for debt and equity, commercial lending strengthening and continue broadening out. We continue to see strong consumer spending activity, which at the end of the day shores up the US economy. Our company is well-positioned to be a part of all that growth, we look forward to talking to you next time. Thank you.

Speaker #3: Commercial lending is strengthening and continues to broaden out. We continue to see strong consumer spending activity, which at the end of the day shores up the U.S. economy.

Speaker #3: Our company is well positioned to be a part of all that growth. And we look forward to talking to you next time. Thank you.

Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Q2 2026 Bank of America Corp Earnings Call

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