Bank of America Corp (NYSE:BAC) Q4 2019 Earnings Conference Call - Final Transcript

Jan 15, 2020 • 08:30 am ET

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Bank of America Corp (NYSE:BAC) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions]. We'll take our first question today from John McDonald with Autonomous Research. Please go ahead.

Analyst
John McDonald

Hi, good morning. Paul, wanted to ask on the NII outlook. When you put together your -- your commentary about the quarters; year-over-year, does that imply flat to down a little bit maybe on the NII, in terms of your outlook against flat rates?

Executive
Paul M. Donofrio

Yeah, year-over-year modestly. I would say

Analyst
John McDonald

Down modestly?

Executive
Paul M. Donofrio

Yes.

Analyst
John McDonald

Okay. And then how are you feeling? I guess if we think about positive operating leverage for this year, you mentioned the stability and expenses while you continue to invest. How are you feeling on fee income growth, when you wrap it all together, the prospects for positive operating leverage into 2020?

Executive
Paul M. Donofrio

So obviously, we talked about in the prepared remarks, the transition that we're going to with the -- in the rate environment. I would just remind everybody, we had 18 consecutive quarters of positive operating leverage. And admittedly, it's a little bit more difficult to achieve operating leverage, given the decline in interest rates last year, and the associated impact on NII. As I said though, assuming a more stable rate environment, we would expect NII to return to growth in the second half of 2020, driven by loan and deposit growth. And remember NII is not directly linked to expenses the way other revenue is in, for example, investment banking, sales and trading, wealth management. We run and invest in the company for the long-term sustainability and for growth, and by the way these investments over many years lay the foundation for operating leverage.

So having said all that, we're not blind to changes in the operating environment, but we are also not managing rigidly to quarterly financial metrics. We are focused on the things that we can control, like driving client activity, deposits, loans, investments, efficiency improvements, we are focused on operational excellence. So if things change, we'll adjust. But currently, we feel our client activity and market share gains continue to support our investment plans in the near term.

Analyst
John McDonald

Okay, fair enough. Thank you.

Operator
Operator

We'll take our next question from Glenn Schorr with Evercore. Please go ahead.

Analyst
Glenn Schorr

Thank you. I have a follow-up question on your comments on the promo balances in cards and your pullback there. And I'm curious if that is a function of pricing getting tougher there, terms getting tougher there, or is that your just responsible thought process 11 years into a recovery?

Executive
Paul M. Donofrio

I think it's more a reflection of responsible growth, and how we run -- how we're focused on the customer and how we're focused on total revenue, and not necessarily NII or fees. When you look at card balances, they certainly reflect a couple of items that we talked about, and it certainly reflects our focus more on profitability. First, we've been reevaluating some relationship prospects who are just looking to gain rewards or take a short-term -- take short-term advantage of promo balances. So clearly that's affected balances