Bank of America Keeps Guidance on Expenses, Net Interest Income Unchanged

Bank of America Corp. is keeping its guidance unchanged for expenses and net interest income for the second half of the year.

(Bloomberg) — Bank of America Corp. is keeping its guidance unchanged for expenses and net interest income for the second half of the year.

“We haven’t given up the fight,” Chief Financial Officer Alastair Borthwick said at a conference hosted by Barclays Plc Monday. “The key will be for us to drive organic growth and maintain expense discipline.” 

The CFO reiterated previous forecasts for NII — the revenue collected from loan payments minus what depositors are paid — at about $14.2 billion to $14.3 billion for the third quarter and $14 billion for the fourth. 

Still, Borthwick said it’s going to be harder to keep NII at current levels. “I think that’s why we’re so focused on expense discipline,” he said. “At the same time, we’re pretty good at this.”

Shares of the Charlotte, North Carolina-based company closed at $28.48 in New York on Monday and are down 14% year-to-date.

Challenges in pricing for deposits and migration of customer funds can hurt banks’ NII, as customers seek higher yields for their savings. Bank of America’s deposits are flat to higher compared to the previous quarter, Borthwick said. The bank also has not seen major changes to the rotation from interest-bearing to non-interest bearing accounts, or to the way the bank thinks about pricing its deposits, he said. 

At the same time, loan growth has slowed at Bank of America, according to Borthwick, with commercial borrowing down as corporations take on less debt. 

The bank still projects expenses to be around $15.6 billion for the fourth quarter, compared to $15.5 billion in the fourth quarter of last year, Borthwick said. Bringing down headcount has been a way to manage expenses, and the bank is still working to find efficiencies and ways to emphasize digital technology.

Borthwick also hinted that the two biggest drivers to earnings and NII are the markets and trading business. 

“There is always third-quarter seasonality,” he said, but the bank expects to be up by a percentage in the low-single-digits in that business compared to the same period a year ago. 

Investment banking, which has been crimped across Wall Street with the fee pool down roughly 35%, is expected to do better than peers, according to Borthwick. 

(Adds shares in fifth paragraph. An earlier version of the story corrected the timeframe in the sixth graph, reference to card spending in seventh and an expense figure in the eighth paragraphs.)

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