Helped by a recovering economy and the release of billions from its loan-loss reserves, Bank of America beat analyst expectations and doubled its Q1 profits compared to the same period last year. The financial giant also pointed to the continued growth of digital engagement amongst its customers during COVID-19 across all its business units - both consumer and wealth.
Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services.
The company serves approximately 66 million consumer and small business clients with approximately 4,300 retail financial centres.
For Q1 Bank of America reported profits of $8.1 billion, which compares to profits of $4.01 billion in the same period last year.
CEO Brian Moynihan said that the organization is in a much better position than it was a year ago, helped by economic prospects, and pointed to its highly engaged digital customer base. He said:
It's been a year since we first reported our results, which would include the health crisis impact. But what we see different now is we see an accelerating recovery versus the economic uncertainty that we would have faced the last year at this time. The most recent economic indicators reflected an economic recovery that has gained momentum and continues to be supported by fiscal-monetary policies.
From our company's perspective, we have emerged as an even stronger company and competitor than what we were when we entered the healthcare crisis. Compared to last year, Bank of America's balance sheet has higher capital ratios, higher reserves with lower charge-offs and record liquidity.
As the economy has improved, customers have continued to increase their business across our platform. When you think about it from a customer's perspective, which is what we do as a business and comparing across the pandemic period of the last 12 months, we have simply added more customers across every line of business. And those customers are more digitally engaged in every business as well.
As noted earlier this year, Bank of America has found that COVID-19 has accelerated its digital activities, much like other sectors. According to its latest results, this is a trend that is set to continue.
Moynihan said that the bank had added nearly 1 million active digital customers this quarter, pushing it past 40 million active users, which is being driven by increased use amongst boomers and seniors. He added that the bank's online trading platform, Edge, also saw growth:
New investment relationships in our consumer businesses and Merrill Edge platform now total more than 3 million accounts and net new households continue to grow both in Merrill Lynch and the Private Bank. We saw aggregated client flows across our investment platforms of $48 billion in the quarter, bringing those total investment assets over $4 trillion with a range of those capabilities from our digital-only capabilities in our consumer business all the way through the great service and capabilities provided by our 20,000 wealth advisors.
Moynihan also noted that given the progress made in the bank's digital engagement, it will continue to rationalise real estate for employees and for customers.
CFO Paul Donofrio added some details on digital enrollment for the quarter, stating that 70% of the bank's consumer households now use some part of its digital platform. He also noted increased use of the bank's payments platform, Zelle. Donofrio sad:
We continued to see digital payments and Zelle taking hold across all our businesses. Zelle consumer dollar volume is up 72% year-over-year. Small businesses up 182% year-over-year, and 90% of our business-to-consumer payments in global banking are now made via Zelle.
And went on to note the success of digital for Bank of America's wealth clients. Donofrio added:
In Merrill and the Private Bank, our clients and advisors have both embraced the value of a digitally enabled relationship in which digital tools are critical mechanisms for fast, safe and secure interactions. Our wealth clients are some of the most highly engaged clients in the franchise with 80% of Merrill households digitally active.
In Q1, we saw a record number of log-ins. Clients are logging in to trade, check balances, and originate loans with ease all of which can be done through a simple side - sign in. We continue to enhance and modernize the capabilities for both the client and advisor, and these capabilities are becoming key differentiators, as well as being recognized by third parties.