Bank of America reports higher Q1 income, prioritizes patents and financial centers
Bank of America announced Monday its first quarter results, ending March 31, 2022. Along with the earnings report, Bank of America CEO Brian Moynihan and CFO Alastair Borthwick shed some light on where the company is going as the year progresses.
The company is increasing its full-year tech initiative budget to $3.6 billion. In addition to being on pace to match the 512 patents Bank of America filed last year, Borthwick said the company is building 100 new financial centers and renovating more than 800 throughout the year. Bank of America is also still working toward the goal of raising minimum hourly pay to $25 by 2025.
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Consumer digital engagement continues to grow, with Moynihan indicating that Bank of America is now selling more digitally than in person. The bank is also processing more Zelle transactions than checks, and will continue to invest in digital channels as the year goes on.
"Our continued investment in digital capabilities drove activity with our customers as we crossed 50% in digital sales this quarter," Borthwick said on the earnings call.
Additionally, Moynihan took time on the call to address the potential impact of macroeconomic conditions including supply chain issues, the war in Ukraine, the on-going global pandemic, and the Federal Reserve increasing interest rates to combat rising inflation.
Despite the many factors already affecting the economy this year, the company remains optimistic and said it's adequately prepared to deal with these challenges. "We do remain mindful of all these. So could a slowdown in the economy happen? Perhaps. But right now, the size of the economy is bigger than pre-pandemic levels," he said on the call.
He went on to say that consumer spending is looking strong, unemployment is down, and company earnings are up. In the case of the Fed increasing rates even further, Maynihan said the company runs quarterly stress tests to prepare for it
"What if we're wrong and things do get tougher? We already know what that looks like. In 2020, as we built significant reserves, we also built 90 basis points of capital during the economic shutdown period. Rates moved against us and earnings fell. So we have already proven resilient," Moynihan said.
The company reported a pretax income of $7.9 billon on revenue of $23.2 billion, with an EPS of $0.80. Both income and revenue for the quarter were up compared to quarter one of 2021. Expenses for the company were also up.
"As we look forward, we continue to invest heavily in technology, people, and marketing across our lines of business, and we've continued to add new financial centers in expansion and growth markets," Borthwick said.