Bank of America Q4 Earnings Call Highlights

Core Insights - Bank of America reported a fourth-quarter net income of $7.6 billion, a 12% increase year over year, with total revenue rising 7% to $28.4 billion, driven by a 10% increase in net interest income to $15.9 billion on a fully taxable equivalent basis [5][3][1] Revenue and Income - Total revenue for the quarter was $28.4 billion, with $10.4 billion derived from sales and trading, investment banking, and asset management fees, reflecting a 10% year-over-year growth in these market-facing areas [1] - Net interest income (NII) improved to $15.9 billion, up $1.4 billion year over year and $528 million sequentially on a fully taxable equivalent basis [3][5] Expenses and Operating Leverage - The company reported $17.4 billion in expenses for the quarter, a slight increase of less than 4% year over year, resulting in over 300 basis points of operating leverage due to revenue growth [6] - Expense increases were primarily driven by incentive compensation linked to revenue growth and higher brokerage clearing costs from increased trading activity [6] Headcount and Productivity - The bank maintained a flat headcount of approximately 213,000 employees throughout the year, focusing on productivity improvements through digitalization and AI [7] - Management emphasized that productivity gains allowed for the addition of client-facing associates while reducing operational support roles [7] Balance Sheet and Capital Management - Total assets at the end of the quarter were $3.4 trillion, with deposits increasing by $17 billion from the previous quarter [10] - The bank returned $8.4 billion to shareholders, including $2.1 billion in dividends and $6.3 billion in share repurchases, with a 4% reduction in the average diluted share count [11] Credit Quality - Asset quality remained strong, with net charge-offs of $1.3 billion, down $80 million from the previous quarter, and a net charge-off ratio of 44 basis points [13] - Average loans increased to $1.17 trillion, an 8% year-over-year growth, driven by a 12% increase in commercial loans [14] Future Guidance - Management reiterated guidance for 5% to 7% growth in net interest income for 2026 compared to 2025, anticipating two interest rate cuts in 2026 [15]