Inside Bank of America’s Consumer Banking Success



BAC’s Consumer Banking segment

Bank of America’s (BAC) Consumer Banking business gets most of its income through interest from banking services but also from service charges, credit card income, charges on mortgage banking, and brokerage assets.

The bank’s Consumer Banking division has expanded in recent quarters on the back of rising deposits, loans and leases, brokerage assets, and rising card accounts. The division is expected to see higher deposits, subdued growth in loans and leases, higher brokerage assets, and higher card accounts in 2Q17 as well as in 2H17.

In 1Q17, the division posted net income of $1.89 billion, as compared to $1.76 billion in 1Q16 and $1.92 billion in 4Q16. The YoY (year-over-year) rise was mainly due to higher interest income and lower non-interest expenses, which were partially offset by higher credit provisions.

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Deposit growth

Commercial peers (XLF) including J.P. Morgan (JPM), Citigroup (C), and Wells Fargo (WFC) have seen strong increases in deposits due to wealth generation in equity classes and lower unemployment rates. But any major decline in equities and corporate profits could stall or reverse this trend.

Bank of America’s Consumer Banking division managed 11% higher client balances in 1Q17, reaching ~$1.1 trillion. The banking giant saw 8.4% higher loan balances, reaching $257.9 billion, and a 9.9% rise in deposits, totaling $635.6 billion.

The bank also issued over 1.2 million new credit cards in 1Q17 and managed 22% growth in digital sales. Its brokerage assets expanded to $153.8 billion in 1Q17, as compared to $126.9 billion in 1Q16, reflecting the trend of a higher portion of savings going toward equity and alternative asset classes.


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