Bank of America (BAC) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $6.9B ($0.81 EPS), down from $7.8B ($0.90 EPS) in Q3 2023, as higher fee income and digital engagement offset lower net interest income and increased expenses.

• Revenue was $25.5B, up modestly year-over-year, driven by growth in investment banking, asset management, and sales and trading fees.

• CET1 ratio stood at 11.8%, with book value per share up 8% year-over-year to $35.37 and tangible book value per share at $26.25.

• Returned $5.6B to shareholders in Q3 via $2B in dividends and $3.5B in share repurchases; new $25B stock repurchase program authorized.

• Digital engagement reached 48 million active users, with digital sales accounting for 54% of total consumer sales.

Financial highlights

• Net interest income was $14.0B, down $412M year-over-year due to higher deposit costs, but up 2% sequentially; provision for credit losses was $1.5B, up from $1.2B in 3Q23.

• Noninterest income rose to $11.4B, led by higher investment/brokerage fees and service charges.

• Noninterest expense increased 4% year-over-year to $16.5B, mainly due to compensation, technology investments, and market-related activities.

• Return on average assets was 0.83%; return on average tangible common equity was 12.8%; efficiency ratio was 65%.

• Allowance for loan and lease losses was $14.4B (1.24% of loans/leases); net charge-off ratio was 0.58%.

Outlook and guidance

• Net interest income is expected to grow in Q4, with Q4 NII projected at $14.3B or more, assuming two 25 bps rate cuts and modest balance increases.

• Operating leverage is anticipated to return in 2025 as NII growth and expense discipline continue.

• Management expects continued pressure on NII from deposit costs, with some offset from higher asset yields and Global Markets activity.

• Credit loss provisions may remain elevated, especially in credit card and commercial real estate portfolios.

• CET1 capital levels provide a buffer above the new 10.7% minimum requirement effective October 2024.