Bank of America Corp (BAC)

“Right now, we see very strong performance this quarter, and we expect it to continue based on the market conditions.”

“We're still confident. We're still on track. We'll get to that 230, and we're a year closer now.”

“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 probably inside a couple of years now to get there just based on the progress that we've made.”

“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 second half of the year.”

“We kind of felt like what we were prepared to commit for the next three to five years was 200-300 basis points of operating leverage.”

“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.”

“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 give good returns and things like that.”

“We remain pretty constructive on loan growth in the second half. No changes there.”

“Well, year-over-year it'll be up because we've put more balance sheet into the business.”

“We know we've got tougher comps in the second half, but it's still a strong second half.”

“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.”

“Yep. 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 second half of the year, similar to what we've been seeing.”

“Net, net, we expect that to be a positive.”

“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. It'll help us on the return on tangible common equity as well.”

“We're offering the 300-400, recognizing that we've already booked 450 for the first half, so that's good.”

“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 300-400 basis points.”

“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 points rate hike in September.”

“We now expect full year 2026 NII growth to be at the upper end of that 6%-8% range, supported by anticipated loan and deposit growth, fixed rate asset repricing, and balance sheet optimization.”

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

“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 fourth quarter, but it'll be flat to slightly down is my guess.”

“Now, we think that'll happen this year as well, but it might not.”

“Given our outperformance against expectations of NII in Q1 and based on the most recent interest rate curve, which has now shifted from 2 rate cuts expected to having none currently, we're raising our full year NII growth guidance range for 2026 versus 2025 to be up 6% to 8%, and that outlook continues to assume moderate deposit and loan growth.”

“We provided a guidance on operating leverage looking forward over a 3- to 5-year period and said we're aiming for 200 to 300 basis points.”

“I just think of the long term, 50 basis points over the minimum is more of what we're shooting for.”

“So -- so we brought it from a broader range to a narrow range, expect us to keep it in the 50 basis points that we said.”

“We did this quarter, and we expect that the NII will drop to bottom line. And that -- and so if it goes up, you'd expect us to see a higher end of the operating leverage range like we did this quarter.”

“As a reminder, for the full year 2026, we expect an effective tax rate of just a little more than 20%.”

“Looking ahead, we continue to expect more than 200 basis points of positive operating leverage for the year, consistent with our prior guidance.”

“Looking ahead, while the rate environment remains dynamic, continue to see multiple levers supporting NII, including balanced growth, funding optimization and ongoing roll-off of lower-yielding assets.”

“Taken together, if Basel III Endgame and G-SIB frameworks are adopted as proposed, we believe Bank of America is likely to see some reduction in overall capital requirements relative to the current regime in future periods”

“As proposed, Basel III would result in modestly higher capital requirements. However, the proposed changes to the G-SIB surcharge are expected to more than offset the Basel III end game impact for U.S. G-SIBs.”

“That activity is healthier than a year ago and supports a continued constructive fee environment.”

“I think -- Erika, I think so. I mean if the rates aren't moving, I don't see a great deal of impetus for us to be changing what we're paying in the interest-bearing side.”

“I think last time we got together, we said probably somewhere around $100 billion or so a little more, it could be a little less, but it's in that kind of a number.”

“And that's why you see the beta there, obviously quite high. Same thing in the upper end of wealth management. Consumer, you see much less in the way of pricing coming down because we have so much in the way of noninterest-bearing and checking and so much in the way of low interest-bearing. So we feel good about the team's pricing discipline overall. In terms -- and you should expect that to continue in Q1, recognizing that the rate cut was late in Q4.”

“Focusing on total net charge-offs looking forward in the near term, we expect continued stability in total net charge-offs, given the mostly benign consumer delinquency trends and low unemployment data, the continued stability of C&I and reductions in our commercial real estate exposures.”

“Yes. So [indiscernible] was very clear about this at Investor Day. It's our intention to continue to accelerate the growth in card.”

“So that's basically 8 quarters from -- including this quarter, obviously, first quarter '26 and then we move into the 16 level, and then we move to the upper end of the range as we move through the third year.”

“I'd say probably at this point, somewhere around $50 billion to $100 billion just on ballparking that between repo CP, some of the short-term wholesale funding institutional CDs that we put out there that are just quietly rolling off now quarter after quarter after quarter.”

“I think Global Markets NII will grow with the continued investment in loans and in the business over time.”

“So we feel good about the mix of deposits changing in our favor this year.”

“Yes. So embedded in our NII assumption is loan growth in the mid-single digits Matt.”

“I think we made it clear that you had -- and by the 8th quarter to the 12th quarter, you move in the lower part of the range and then the upper part of the range given a core economy growing it to 2.5% type of number.”

“Yes. So Mike, we'll be up on initiatives this year, 5%, 6%, 7%, I think, types of numbers.”

“So it's going to be about bringing up the numbers of people down over time, and we expect the headcount to come down during this year.”

“For 2026, we expect an effective tax rate of roughly 20%.”

“Those expectations include a constructive fee environment that complements our expected NII growth. We've seen encouraging momentum in asset management fees, investment banking and Sales & Trading, and we look for that to continue.”

“Looking ahead, our focus remains on delivering operating leverage for shareholders. We expect to generate about 200 basis points of operating leverage in 2026.”

“During 2026, we expect roughly $12 billion to $15 billion in combined mortgage backed securities and mortgage loans to roll off quarterly, and those will be replaced with new assets at 150 to 200 basis points higher in yield or they'll allow us to pay down expensive short-term debt.”

“To reiterate our expectation from Investor Day, we expect good core NII performance from loan and deposit growth that will additionally benefit from sizable fixed asset repricing and cash flow swap repricing to drive the 5% to 7% NII improvement.”

“At Investor Day in November, we indicated our expectation that we would see 5% to 7% growth in net interest income in 2026 compared to 2025, and that's still our belief today based on the latest interest rate curve, which includes 2 rate cuts in 2026.”

“Historically, we might see consumer deposit growth at GDP to GDP plus type levels. Now that would put you in the sort of 4% to 5% type of range. Maybe we don't get all the way there this year, but we just come off a year where we added 3%. So we're obviously expecting and hoping for something slightly higher again in 2026 as we move to something more normal.”

“For now, I'd use the 20% -- I mean, obviously, hence the guidance earlier... I think over a very long period of time, it's possible that the effective tax rate drifts up.”

“I don't see any reason that it would be a whole lot lower necessarily than it was last year, but last year was a good 1 year, no question.”

“It's allowed our client base to make longer term decisions. And that's reflected in our investment banking activity in terms of the pipelines. They're up this quarter up. Over double digits. So we feel good about the pipeline and the way it's developing.”

“And even with the third quarter. Late quarter interest rate cut and with the curve anticipating two more cuts in October and December, we believe fourth quarter NII will be in the higher end of that range of expectations. So think of that as being $15.6 billion plus on a fully taxable equivalent basis. And that would represent approximately 8% growth from the fourth quarter of 24.”

“And around global banking. While we always do it on a client by client basis. Particularly around interest bearing, we'd expect to pass through as the rate cuts develop as well. So I'd expect you to see us with the same disciplined pricing on the way down as we offered on the way back up.”

“In the wealth business, I'd expect us to fully pass through rate cuts from this point forward.”

“Normally Q4, you see a seasonal impact from client activity slowing as you move into the fourth quarter. That would be pretty normal. But the constructive environment for the sales and trading business remains as investor clients continue to reposition based on rates and policies as they develop around the world.”

“Focusing on total net charge-offs again and looking forward in the near term, we would not expect much change in total net charge-offs given the steady consumer delinquency trends, stability of CNI and reductions in CRE exposures.”

“Looking ahead to Q4, we expect expenses to remain roughly in line with Q3.”

“First I just want to highlight the strong operating leverage which we expect again in Q4.”

“So, Erika, I mean, I think you should expect us to continue to walk our return on tangible common equity north from here.”

“So we've got a little bit more of that to do. It won't be the major part of our any net interest yield accretion. But I think you can almost think about it being kind of like, you know, 1% slower, maybe over the course of the next year or so.”

“Yeah. And the background there, Betsy, just so you know, is we're obviously going to get pretty good core growth from, you know, just the organic behavior of the clients and adding some over time. So think about that like 4 to 5%.”

“Our target will be, as we said before, Jim, sort of 50 basis points over the regulatory minimums. And so you should expect us to keep working that down.”

“That should result in full year NII growth, somewhat similar to 2025 performance over 2024. So think of that as something like 5 to 7% growth.”

“And in 2026, we expect to see roughly $10 to $15 billion in combined quarterly mortgage-backed securities. And mortgage loans. Those will roll off and they'll be replaced with new assets at 150 to 200 basis points. Higher yield.”

“Thinking a bit more generally, we just note for the full year of 2026, our expectations about the drivers of growth are largely aligned with 2025 performance. We expect good core NII, performance driven by core loan and deposit growth. A little bit above GDP,”

“We're now seeing the second half benefits kick in, and we'll expect to get to kick in and NII pushing operating leverage back in the business. That will continue to be solid revenue growth and earnings per share as we look forward.”

“So we expect them to use that and expect us to move down to 50 basis points.”

“So we believe an appropriate buffer is 50 basis points plus or minus -- yes, 50 basis points, and that's what we are running down to, pushing down before.”

“NII growth for the year, 6% to 7%, hopefully, a record leaves you satisfied at the end of the year, but we'll be working on next year's course in the second half.”

“as that now hit a record level this quarter and is going to grow off of that record level, you'll see the operating leverage overall kick back in.”

“the overall inflation rate and expenses are starting to flatten out, even though you hear a lot of talk about the inflation rate outside in general. But at the end of the day, we've got stability in terms of headcount, in terms of third-party rents and all that stuff is sort of flattening out.”

“out of the orders on AML that were public and stuff, we obviously put a 1,000 to 2,000 people to work to clean up a lot of stuff. That's now tipping over. So we feel good about that as we move into the second half of the year.”

“We said to everyone that we thought that the second half had a little bit more in the way of fixed rate asset repricing and cash flow swap repricing in the first half of the year. That accounts for the growth being larger in the second half of the year, but it's not different between Q3 and Q4. So it ought to be about the same.”

“So I anticipate that any expense growth would be revenue related and that we should be pretty flattish. Maybe we benefit in Q4 from seasonally slower activity.”

“We're going to drive it back to that [ 220 to 230 ] with every available opportunity.”

“So yes, we will move back down in low 60s, and then potentially crack through it with, obviously, just the NII lift in the operating leverage lift.”

“our mentality will be, when we come off of Q4, how do we grow NII sequentially each quarter from there. And we're going to benefit again from that fixed rate asset repricing again next year.”

“So I would say, we're likely to be involved in deals for the next couple of years. And then you'll start to see the portfolio come down in the course of 2028, all the way through 2033.”

“I think what we're talking about, which is the organic growth Brian just talked about, driving the deposits in the loans, that should continue. The fixed rate asset repricing, we're going to continue to benefit from again next year.”

“So expect us to keep gaining share. We'll keep closing the gaps that you mentioned, It's getting closer to the you know, third place gap.”

“Bottom line, our fourth quarter exit rate expectation for NII is unchanged to $15.5 billion to $15.7 billion from our previous expectation.”

“So so it's trickier, obviously, in consumer where we're paying 61 basis points on $950 billion. But even there, just because we we still have some CDs outstanding and we still have some preferred. We're able to take that down last quarter and look to do that again in the future.”

“So those investments are paying off. We expect that to continue across the board.”

“That's still our current thinking, John. Mean, I think we said 2% to 3% for the full year. We feel like we're on course there. It might be towards the higher end, but we just gotta see what happens with fees over the course of this year.”

“Looking forward, as we said last quarter, we expect the tax rate for the full year 2025 be in a range of 11% to 13% excluding unusual items.”

“And that means we're still expecting strong full-year NII improvement this year of 6% to 7%.”

“And while the interest rate environment has changed a little, our current expectation for the exit rate of NII in Q4 remains unchanged.”

“And we expect these loans to add just over $100 million in NII annually.”

“So we're we're aiming at 2.3%, and we still feel like over the course of the next couple years, that's the right answer.”

“It'll be a little bit of a headwind in twenty-six if that in fact is the case.”

“So that's what leads us to this idea of we think the NII growth will accelerate to 6% to 7% and for the full-year.”

“It would grow -- it would grow with the markets and stuff that we have other efficiencies and offsets under that growth.”

“I wouldn't assume that we're going to take it down through, you know, buybacks in your modeling. It's got to be there to support growth.”

“We aren't expecting much movement around credit based on a pretty solid economic outlook.”

“We don't see overall net charge-offs or the related ratio changing much in 2025, without much change in current GDP or the employment environment, we expect the net charge-off ratio to be in the range of 50 to 60 basis points of loans for 2025.”

“And that's all part of our expectation that expense should be roughly 2% to 3% higher in 2025, compared to 2024.”

“Based on our more recent growth experienced, we're assuming loan and deposit growth in 2025 that's higher than 2024, and more consistent with growth in a 2% to 3% GDP environment.”

“Then we expect that growth to increase through the year to the point where it could be 6% to 7% higher in 2025 than 2024.”

“And we expect that growth to continue in 2025.”

“This obviously provides a great starting point for 2025, and based on the assumptions Alastair is going to discuss a little later, we should report record NII in 2025.”

“If the Fed funds rate stays higher, we'll get there faster.”

“So look, we're in a position where we're we believe we're going to grow NII again in the Q4. That's going to set us up, I think, quite well in terms of 2025.”

“We will continue to be discipline with the capital and the capital return, and we'll continue to return more of it if more is available, we're sitting with a fair amount of excess over the current set of rules.”

“In the end of the day, we have excess capital based on the estimates of the old one. So yes, it would at the margin.”

“As we particularly as we get into the third quarter and fourth quarter of '25, you you'll see a benefit in commercial yields there because those ones are at lower rates and they will be repriced in Q3 and Q4.”

“What began as a slow quarter this summer gained some momentum through September and the pipeline looking forward looks solid.”

“With the trajectory shifting in NII, we should see earnings in this business begin to shift as well.”

“And with regard to reserve levels on a weighted basis, we remain reserved for an unemployment rate of 5% by the end of 2025 compared to the most recent 4.1% rate reported.”

“On that basis, a 100 basis point increase would benefit NII by $1.8 billion, while a decrease of 100 basis points would decrease NII over the next 12 months by $2.7 billion.”

“And as described previously, we expect to see roughly $200 million benefit in Q4 from the BSBY alternative rate transition.”

“Last quarter, we told you we expect about $20 billion in the aggregate of fixed rate loans and securities to reprice on a quarterly basis, and those are expected to reprice into higher yielding assets and provide a benefit to NII for many periods ahead.”

“We also assumed very modest balance increases in both loans and deposits in Q4, building off the activity seen in Q3.”

“With regard to a forward view of NII, there are obviously several variables at play in the Q4, and we still expect Q4 NII to grow, and we expect it to be $14.3 billion or more on a fully tax equivalent basis.”

“NII grew 2% this quarter and Alastair will note later, we expect NII to grow again in quarter four, even as the market expects two more rate cuts in quarter four.”

“We kind of feel like that's going to be a 2025 operating leverage question, and we'll be able to update you, I think, with some precision as we get into the fourth quarter.”

“Mike, that was me. And basically what I'm saying is you plateaued in terms of the delinquencies, which means the second-half is pretty well determined, as you know, because it's just a march from [36 to 90] to 180. And it'll be -- the charge off rate will be flattish. We're kind of back to normal 3.80% or so.”

“Our job is to maintain -- our view is we will maintain a 50 basis point type of management buffer to whatever the requirements are.”

“Well, look, we're obviously on it right now. We feel like this is the trough. We're trying to build it from here. We'll make meaningful strides on that through 2025.”

“And then the commercial, we spoke to the question of CRE office, which has been dropped quarter to quarter. We expect the second-half to be better also.”

“And in terms of return on allocated capital, right now we're right around that 14%. We want to be 15% or higher for our shareholder.”

“So I'd say right now in terms of the 1.93%, we feel like we are under earning. We feel like that number is going to go up over time.”

“We feel like Q3 and Q4 are likely to be better.”

“we expect Q4 NII to be around the $14.5 billion level, plus or minus. That would be approximately 4% to 5% higher than this quarter's NII.”

“we are just reiterating our expectation that quarter two would be the bottom for the NII in the rate cycle that we have been in. And our trajectory remains the same, the belief that our NII will begin to rise in Q3 compared to Q2 and then rise again in Q4.”

“We also have increased our technology initiatives and expect to spend nearly $4 billion on technology initiatives this year.”

“our forward view has an expectation of low-single-digit growth in loans, low-single-digit growth in deposits, with continued slowing of rate paid movement through the back half of 2024.”

“You'll note we don't expect much movement around our modestly, liability sensitive global markets NII activity.”

“So starting in the second-half of 2025, we begin to get some additional NII tailwind, because the cash flow hedges with lower fixed rate likes where we receive, those will begin to roll off, and will likely replace those at higher current market rates at the time.”

“That Q4 partial quarter benefit will grow by a slightly smaller sequential NII benefit in Q1 ‘25. And then it begins to taper off heading into 2026.”

“This supports our previous expectation that net charge-offs in the second-half of 2024 will be lower than the first-half of 2024.”

“This should lead to stabilized net credit losses in credit card in the second-half of the year.”

“We expect NII to grow in the third quarter and fourth quarter of this year.”

“We think through a cycle, we got to get back to a more normal number like 2.30-ish over time.”

“Our expectation would be, they will be as consumers over time want to take out part of the equity in their home at a rate that is reasonable, but doesn't require to refinance the whole first.”

“And I would expect that to continue for the foreseeable future, but it's a competitive environment, we've got to see.”

“Anything that changes in that will be positive, Gerard. We don’t need to retain capital to meet those standards, so we’re off and running.”

“As we look at it, we believe that they’ll continue to gain share, and I think this is a more normalized level and whether it’s pulled forward or not, we’ll find out, but it’s a more normalized level given those dynamics and one we should be able to build off of”

“We continue to manage expenses well under the inflation rate”

“I would expect us to perform relatively better than we’ve disclosed so far.”

“Yes, I mean, we’ve deliberately worked on that over time, but we’ve always, I think, had a pretty good program of hedging the fixed rate securities in the FS book so that they’re swapped, and that means that if rates go up, we obviously benefit from that. It doesn’t necessarily hurt us in terms of AOCI, so. Most all of the treasuries that you see in our portfolio are swapped, so I would expect very little in the way of AOCI impact there.”

“I expect all the NII improvement in Q3 and Q4 to drop into that net interest yield”

“expect us to continue to return capital at a fairly strong rate as we move through the second quarter and beyond, and the rules become clarified.”

“so we believe the losses on these office properties have been front-loaded and largely reserved. We expect the losses to move lower in the second quarter and we expect a notable decline in the second half of the year when compared to the first half of this year, absent any material change in expected real estate prices.”

“On a weighted basis, we remain reserved for an unemployment rate of nearly 5% by the end of 2025 compared to the most recent actual 3.8% rate.”

“Continued digital engagement savings and operational excellent initiatives should help us offset other cost increases for people and technology through the back half of the year.”

“As we look forward in Q2, we expect a decline from the Q1 level as we typically see about two-thirds of the Q1 elevate payroll tax expense come back out, and the remainder of the year expense is expected to trend down.”

“Our forward view also includes an expectation of low single-digit loan growth and some moderate growth in deposits as we move into the back half of 2024.”

“Further, we continue to expect that Q2 will be the low point for NII and we expect the back half of 2024 to grow.”

“As we look forward for Q2, we expect some modest impact of lower deposits in wealth management as client make their seasonal income tax payments, and we expect global markets NII to decline mostly seasonally a little bit as well, so we expect second quarter NII could approach $14 billion on an FTE basis.”

“there’s a lot of cash at this point, and so that would tell you it’s supporting the ability to see continued assets under management flows going forward, depending on how obviously the stock market shakes out over time.”

“For right now, we’re in that transition period, but we’re anticipating that loan growth will pick up at some point in the future, but it’s not an enormous part of our NII guide at this point.”

“I think we probably are looking--you know, if this environment continues, we’re looking at another $100 million per quarter going forward, but it’s--to Brian’s point, it’s the good expense that comes with revenue growth over time.”

“we kind of feel like consumer is approaching that floor, so we’re still in this belief that Q2 is going to be--Q3 may be the turning point for consumer.”

“Correct. That tends to be a lag by a month or so. So you'll see that in Q1.”

“I think we're getting pretty close now because things are beginning to stabilize. They're beginning to normalize.”

“And with stability in rates, you'd expect that to kick back up. We typically are running about $1.5 billion before the added activity because of the rate falling and pandemic a quarter. We're now billion $1 billion, $1.2 billion. You expect it to move back in those levels.”

“And so from now on, we can basically deploy capital to the dividend payment, a couple of billion dollars a quarter, and then everything above that will go to support business growth if we have it, build a little bit of cushion, we need to build over some period of time to meet these new rules if they come through, and then share buybacks, which we bought $800 million or so last quarter, and you'd expect that to keep ticking up.”

“Yeah, well, look, if you look at global markets, in any given quarter, it moves around just based on the customer behavior. But over the long arc, if you look over the course of the past two or three years, it's liability sensitive. So I'd expect if you see rate cuts that'll benefit global markets NII just a little bit.”

“So, look, we're going to see a little bit of rotation, I think, here in Q1 and Q2. I think we'll likely see a little bit of deposit pricing lag.”

“So we kind of feel like the loan growth ought to be low single digits.”

“But at that point, we see growing in the back half of the year, and that's largely, yes, deposits growing, it's loans growing a little bit, it's some restriking of the securities that come off the balance sheet, and it's restriking some of the loans that come off the balance sheet.”

“We're reserved for an unemployment rate of nearly 5% by the end of 2024 compared to the most recent 3.7% rate reported.”

“And as we move through 2024, we expect the quarterly expense to decline from Q1, reflecting a drop in the elevated payroll tax expense and revenue changes, as well as some additional operational excellence initiative work.”

“Ken. Yes, you got it right. We'll get some of it back at the back end of 2024. So we'll get a little bit in the fourth quarter, and then I'd say we get most of it back in '25, most of the remainder back in '26.”

“The accounting lowered CET1 by 8 basis points during the quarter and we will recapture that in the next two or three years.”

“we'll see an offset to this over time through higher NII mostly occurring in 2025 and 2026 after BSBY ceases in November 2024.”

“I think if we got the three rather than the six, Mike, we'd do modestly better, I think.”

“Yeah. On the way down, I'd anticipate that as rates are going down, it's going to cut into our margin on our deposit spreads.”

“So right now, as Brian has pointed out, we've had a slow growth economy in the plan. So I'd anticipate as we get back towards that kind of fourth quarter '19 number, it's going to normalize in there.”

“Well, John, I'll just point out, you can see the trajectory, we've laid it out on the slide... I'd anticipate in the short term that you'd see things begin to -- or just continue that trend.”

“It will be both. I mean there'll be the repricing for sure. And in addition, we'd expect to capture a little bit of margin from any short-term rate hike.”

“Well, higher for longer is going to be better.”

“Now it will be it'll be bouncing around here as we work through the trough in NII that we described, which is we're sort of in the middle of starting this quarter into the first half of next year.”

“In the past, we ran up to [2.30%] (ph) in NIM in a sort of normalized sort of environment, and you'd expect us to keep moving up from there.”

“And then the final thing I'd just say is we have securities reinvestment every month, and that's going to support and grow NII.”

“Now what would happen is we'd have to adjust the pricing and it would become more expensive.”

“Absent that, we'd expect our fourth quarter $15.6 billion expense target to more fully benefit from the third quarter headcount reductions, and that will allow expense to continue the decline experienced throughout the year so far.”

“Additionally, we expect the fourth quarter to go down another couple of hundred million to $15.6 billion, excluding any FDIC special assessment.”

“We believe NII will hover around this expected fourth quarter $14 billion level, plus or minus, in the first half of next year, and then we anticipate modest growth in the half of 2024.”

“We expect Q4 will be around $14 billion fully taxable equivalent, and that increases our full year guidance for NII in 2023 versus 2022 to 9% growth per year.”

“And we can expect other income in Q4 will reflect seasonally higher renewables investment losses when these projects get placed into service.”

“Once we understand the rules, we'll of course have a bit -- a chance to optimize our balance sheet and appropriately price assets to improve the return on tangible common equity.”

“I would also add that while we maintain discipline in deposit price and we pay competitive rates to customers with excess cash seeing higher yields across all the businesses, if rates fall, those particular products will see the rates come down also.”

“This is stronger expense guidance than we thought we could do earlier in the year and sets us up nicely for next year.”

“Expense will decline again in the fourth quarter, excluding any FDIC special assessment, of course. We expect to report $15.6 billion in expenses in 4Q.”

“As we move into October, the spending is holding at that 4% level. So growing, but growing at a basis more consistent with low growth, low inflation economy.”

“But, we're doing 15% today, so that'd be a slight dilution to that number, but not something we couldn't make up.”

“The proposed changes are phased in from '25 -- the middle '25 to '28 under the current proposal. When those are fully phased in, as we used to call Basel fully phased in, if you remember, we would have a need for $195 billion of total capital.”

“Yeah, I'm saying right now, Vivek, that if you think about what rate cuts look like in the back half of next year, in the absence of that, we might guide NII higher, yes.”

“As we look forward to next quarter, we'd add $1.9 billion of expense for the proposed notice of special assessment from the FDIC as a possibility.”

“we feel like we are well positioned to deliver 15.8 this quarter.”

“So I think as you look forward, what you should expect is we just get back to work on both parts of that numerator and denominator will grind away at the NII side. And then on the denominator side, we'll have a smaller, more efficient balance sheet as the environment normalizes.”

“and then we'll get back in sync as we move to '24 and beyond.”

“As we look forward to next quarter, we would expect the third quarter expense to more fully benefit from the second quarter head count reduction, even as we remain in a mode of modest hiring for client-facing positions.”

“On deposits, we are expecting modestly lower balances led by consumer, and we expect continued modest deposit mix shifts from global banking deposits into interest bearing.”

“First, it assumes that interest rates in the forward curve materialized, and an expectation of modest loan growth driven by credit card.”

“That's a slightly better viewpoint than we had last quarter for the third and fourth quarter, with a little more stability closer to the second quarter level, and therefore provides a better start point for 2024.”

“We still believe NII for the full year will be a little above $57 billion, which would be up more than 8% from full year 2022, and this could include third quarter at approximately the same level as second quarter, so think $14.2 billion, $14.3 billion.”

“We plan on opening 50 more centers a year for the next few years, which included an expansion in nine new markets we announced a few years ago”

“Alastair is going to talk to you about a bit more strength we see ahead in our net interest income for the balance of the year and that provides a better start as we think about 2024.”

“It just keeps getting smaller and shorter.”

“So, we're -- we feel good -- very good about our capital and you should expect us to continue to follow the idea to pay the dividend or grow organic -- support the organic growth, pay the dividend and buyback shares, but we've got to get through the near-term sort of what goes on in our business every year at this time.”

“But we expect that to move back in the high-20%s.”

“The margin came down largely because you had to sort of incremental hit to the investment side revenue as the markets fell year-over-year, but we'd expect that margin to move back up to its more traditional 20%, 25% to 30%.”

“But, generally speaking, I'd expect it to slow at some point and I think we're probably getting close now.”

“That reflects modest loan growth and an ever so slightly improved macroeconomic outlook that, on a weighted basis, continues to include an unemployment rate still north of 5% as we end 2023.”

“Second, we anticipate lower wealth management deposits in the second quarter.”

“and we are capturing many of those flows as you see in our numbers, it's just we expect that to slow going forward.”

“So, you can see how with the pace and size of rate hikes slowing, we expect the declines in balances to lessen from here.”

“So I think, in the end of the day, we don't see activity on the consumer side slowing at a pace that would indicate that, but we see, commercial customers are being more careful and things like that.”

“It'll be a dog fight, particularly as we get into the back half of the year, but we still feel good about where we are with respect to the expense.”

“We’d expect to pay higher rates as we continue to move through the end of the interest rate cycle.”

“So I think for your model, Matt, I would use $700 million of an after-tax loss for the fourth quarter as the most likely.”

“I think you should expect that come down again next quarter just with the way rates are going.”

“Yes. We've said that we start growing in the 1% to 2% category, and that's part of these types of inflationary things that you're mentioning, which are higher now and then working it down over time.”

“But you can assume that at the higher end of wealth, for example, I shared that we're passing through most of that at this stage. That's going to be very different versus our noninterest-bearing accounts. It will be different for operational versus nonoperational and commercial. So beta would be in quite different places, but I'm anticipating that they'll just continue to drift up over time.”

“Well, we're obviously modeling in probably the same thing you are. We're going to have to price competitively for deposits in an environment where, obviously, market-based expectations are changing every day. So we're anticipating it's going to be a little bit tougher from this point forward, but that's already baked into our NIM.”

“But look at the 15.3% for three quarters in a row. Honestly, each quarter has had a little bit of something in it. John, if you think about the first quarter when we had [FICA] and that type of stuff and the second quarter had regulatory [exempts to core] obligations. So we're bouncing around low 15s. We expect that run rate to kind of hold.”

“The next year, we said at some point, we'll get back to the 1% to 2% rise.”

“Yes. So the securities portfolio runs off at about $15 billion a quarter.”

“With respect to deposits, I'd say on betas, obviously, we're just increasing those because we've got to be competitive in this environment. And around balances, I think there's a sense that the industry will be flattish, maybe down. We think we're going to outperform the industry ever so slightly.”

“So we think we'll resume that sort of high single-digit, maybe mid if things begin to slow a little bit.”

“So we'll put a little bit towards the buffer. We'll support the organic growth a little bit towards a buffer and the use of rest to send back to you guys.”

“So you should expect that buybacks will continue to increase.”

“Just the way our own ALM projected over the course of the next couple of years, we had some forward starting swaps. Those are going to pay us floating in the fourth quarter, and that's a contributor to the NII growth in the fourth quarter but I think we should assume a little bit third quarter, most all in the fourth quarter, and that's probably it.”

“But yes, we believe we'll grow NII next year.”

“Given the change noted for solar investments, we expect the fourth quarter tax rate to be similar to the third quarter tax rate and we’ll examine the further effects of these changes and how they impact full year 2023 and report on that next quarter.”

“As we look forward, we'd expect our fourth quarter expenses will land our full year reported expense at approximately $61 billion.”

“It moves even higher than that next year, just to give you an idea, it's sort of in the mid 5s, just to give you a general sense.”

“And then sales and trading your guess is as good as ours, but we generally point to the sort of 15% seasonality in Q4 compared to Q3.”

“Investment banking kind of flattish I would think, maybe hoping for a little bit of positive at some point but not necessarily this quarter.”

“I think basically, what -- I don't -- I'd look at the quarter-to-quarter linkage expenses of 15.3 and NII, we told you it was up, what did we say, 650 last quarter, turn to 850. So we exceed our estimates. That's why we stayed in the next couple of quarters because we've got a pretty good line of sight to those, Mike. So we feel pretty good about it.”

“And so the vast, vast majority falls to the bottom line.”

“The third quarter will reflect the full run rate going forward, and we believe these changes are helping to improve overall customer satisfaction and further lower customer attrition.”

“Along the way, we believe our expected earnings generation over the next 18 months will provide an ample amount of capital, which allows us to support customer growth, pay dividends and use the rest to allocate between buying back shares and growing into our new capital requirement.”

“Yes. It's built in. It will keep going down, obviously, as rates go up, but it's going to -- it's not a linear relationship.”

“Well, not a tremendous amount of change. We've had good loan growth. We anticipate we'll see good loans growth. That said, obviously, full year, we're kind of at 12%. We said we thought that we'd have mid- to high single digits. That's kind of what we're still expecting is mid- to high single digits.”

“Yes, think about period end because that's where we are. We've seen the deposits in the first few weeks of July, will be relatively stable.”

“And I think all we're trying to convey though is we think the fourth quarter is going to be higher than the third quarter increase.”

“So we haven't changed much, Matt, in terms of the way we think about running the company. Brian mentioned already, if you look at the last 6 quarters, we're sort of running the place right around $15 billion, out-of-sight. So we still feel like that's the right place, that $60 billion flattish year-over-year.”

“And with respect to falling to the bottom line, I'd say that's going to be the vast majority, but I'll leave that to Brian.”

“We already have a modest buffer relative to what we expect at the end of October.”

“And the way we think about those NII increases, given the expense discipline that we have, is we expect the majority of that to fall to the bottom line for shareholders.”

“And then we expect it to grow again at a faster pace on a sequential basis in the fourth quarter.”

“Given our additional higher G-SIB minimum over the next 6 quarters, we'll work to move above that expected CET1 minimum of 10. 9% by January 1, 2024, and we'll look to exceed that with another 50 basis points of internal management buffer on top of that requirement.”

“There are a couple of places where, for example, our mortgage pipeline is done just with higher rates. I think it'd be natural to think that in some areas where other areas like securities-based lending, as rates go up, that might damage some loans demand there.”

“But generally, a higher sustained rate environment will help us earn a lot more money.”

“We will also continue our upward march on minimum hourly wage toward $25 by 2025.”

“The only one thing to bear in mind is just as a reminder, on insufficient funds and overdraft. Just remember that those that started to kick in in February, and the remainder will pass through in March. So that's probably like -- sorry, May, and that's probably a $750 million hit for the year, if you like, on total fees.”

“On the asset management side, mostly it will be around market levels.”

“Yes. Well, I think we're wise to do that. When it comes to the card side, I'd say, flattish.”

“So, revolver utilization in commercial now in banking is 31.7%. Pre-pandemic are normal, was around 35%. So, that's about 3.3%. Figure that's like $15 billion to $20 billion of loans potential as the economy continues to heal and as clients begin to take utilization back.”

“I think Brian pointed out to you that we're going to build capital over the course of the next couple of years by about 50 basis points.”

“Yes. And Alastair gave you some detail. But just simply put, John, we expect to be relatively flat for 2022 versus 2021.”

“We expect our effective tax rate in 2022 to be between 10% to 12%, absent any tax law changes or any unusual items.”

“So assuming rising rates as reflected in today's forward curve and if we see continued loans growth, I would just reiterate what we said last quarter that we expect to see robust NII growth in 2022 compared to 2021.”

“Net interest income grew 13% and is expected to grow significantly from here.”

“So, we've always said we'd maintain 50 basis points to 100 basis points of cushion.”

“Yes, so, Steven, I think we're continuing to do more with our clients in terms of the ESG side. So, I think when you're modeling, I'd use, say, $400 million to $500 million for Q1 to Q3, and then I'd use just a few hundred million higher for Q4.”

“Yes. So, those are the GTS fees...So generally, when rates go up, the dollar value of the earnings credit goes up and therefore, people shift a little bit to that... So, there'll be pressure on that fee line, but we'll be earning money a different way.”

“But we need to balance the broad nominal returns of growth. And last year, we had good ROTCE, and we expect to maintain that.”

“And then, in terms of deposit growth, we have deposit growth moderating back towards more normal growth over time, just recognizing we're coming off of two years of extraordinary monetary and fiscal stimulus.”

“So, expect us to have a different equation, which is we'll still pay out dividends around up to 30%, like we said. We used to say the other 70% would come back to you. Now, there'll be some for organic growth if in fact we get down to the 10.5% levels and the rest we repurchased on a quarterly basis.”

“Second, with regard to full year 2022, our best expectation currently is we can hold expenses flat compared to 2021, which finished just below $60 billion.”

“First, I want to start by reiterating Paul's comment last quarter that we expect to see robust NII growth in 2022 compared to 2021.”

“So, it's probably a few hundred million negative at the short end over a 12-month period. It's probably a couple of hundred million positive at the long end over a 12-month period, but that's ballpark how to think about it.”

“We'll invest -- we'll continue to expand our -- we have more loans in the global core of investment banking segment outside the U.S. than we do inside the U.S. We continue to expand that.”

“Beyond that, putting the fourth-quarter aside, a good modeling assumption for the normal three-quarters of '22, I would say, absent unusual items. It will be a quarterly loss of 400 to 500 for those ESG investments, Again, in the other income line, more than made up for in the tax line.”

“As you think about modeling, everybody out there, we expect the fourth-quarter loss to be 800 million on the other income line from these tax investments, or even perhaps a little higher, reflecting both that typical seasonal increase in the fourth quarter and partnership investments, as well as there were a few deals in the third quarter that got delayed because of all the logistical stuff.”

“Look, we expect our ESG activities to increase over time, so as we go into '22 and '23, and as we've long talked about the fourth quarter is generally the highest for that pretax -- for that loss that we book in other income for entering into these partnerships.”

“Yes. So look, we expect deposit growth to continue, although it's going to be likely at a slower rate than what was experienced so far this year. And we expect our growth to continue in line with or slightly better than the industry.”

“So the idea would be to grow revenues faster than the economy and grow expenses at a rate of net 1%, maybe 2% if the revenue growth is stronger.”

“We would expect the tax rate in Q4 to be between 10% and 12%, absent any tax law changes or unusual items.”

“Yes. Look, COVID -- there's still a couple of 100 million of net COVID in our costs, just down modestly from Q2. We're seeing some reduction in COVID's costs, but we incurred some new costs as people return to the office. While there's not a lot left, it does create, I think, modest opportunity over the next year or so to get those costs out.”