Okay, so, I'm delighted to welcome our next presenter. He needs no introduction. Brian Moynihan, Chairman and CEO of Bank of America. This is the 15th consecutive time presenting at this conference. It is a record, for sure, and it's also, I think, your 15th year, pretty much, as CEO of Bank of America. So thank you very, very much for coming back. Let's start off with a discussion around the macro backdrop. Obviously, lots of different moving pieces, but you have, you know, a client set that provides really interesting insights and data on the state of the economy. So what does that data set tell you, and what are you expecting in terms of the macro backdrop as we head into 2025?
So I think, number one, on the consumer side, two or three things. First, the consumers are spending money at about a 4% growth rate over last year. The period around Thanksgiving, Black Friday, Cyber Monday was up, you know, 10-ish%, which is strong. They expect to, they told us they expect to spend 7%-10% more than last year. What they're spending on is interesting in that the, it's, you know, clothes and things like that, as opposed to pure luxury items they're spending on, you know, their, their movies and things like that. So it, consumers are in pretty good shape. The, the account balances are strong and still for the lower, for people earning median income and down multiples of where they were pre-pre-pandemic, and that's good, and they've been re-relatively stable.
And then if you go to the commercial side, the markets, you probably have many people talk about it, the enthusiasm picked up after the election and strong and the pipelines built. But if you look at small, middle-sized businesses, they're the group of people that the interest rate change affects the most because they borrow a lot on a floating-rate basis. And what you're seeing them do is, say they're more enthusiastic, and you saw some of the data come out, the line usage is still okay. And as rates come down with a better backdrop for economic growth, this quarter and into next year, I think they'll start borrowing more. But we're seeing some loan growth, which means they're getting out there. And put it together, we think, you know, next year's a 2%-2.5% GDP growth.
Fed cuts here and two more times. Inflation takes all 2025 and all 2026 to get down closer to where they want it, but it, you know, it's a pretty good case. So over the last three years, we've talked about a cliff that we talked about, you know, no balance and no drop. And now we talked about this; actually, we just had normalized growth through it all. It really hasn't changed much in the last several quarters, so.
And then, you know, just as a follow-on, post the election, any changes in your view on the economic outlook?
I think our people are feeling stronger on the company side in the sense that the regulatory changes will be favorable. The ability to get deals done in the M&A side, including in our industry, is favorable, and just that certainty will give them a little more aggressive as rates come down a little bit. Everything's a little bit more stable in terms of interest rates have massive increase that people either factored in as it comes down. The only question would be valuations and will the buyers and sellers meet, but the M&A pipelines are very full. The amount of activity is taking place is very high. The IPO market looks to be, you know, stronger than it was predicted to be, six, you know, 120 days ago, so I think people are enthusiastic and now, but you just gotta see the follow-through.
Okay. So let's talk a little bit about your strategic priorities. You know, as I mentioned, you know, I think January 1 marks your 15th year as CEO. So maybe you can reflect a little bit on your time in the role, and maybe talk about the strategic opportunities you see for the bank heading into the next 15 years as CEO.
I think in the past tense, if you think about where we were in the first day of 2010 when I officially became the CEO to where we are now, what we should be proud of at Bank of America and it's reflected across is how we've built the company back, so to speak, from a lot of mess into a company that has got the highest customer satisfaction across all the businesses, has grown market share across all the businesses, has the highest teammate scores across, you know, all the industries all the companies, and it's produced good shareholder returns and has done what it should have done in the communities in terms of support.
So that brand and that brand positioning reflects all the hard work that we've done in the consumer business, the wealth management business, and the commercial businesses that, you know, shows up now as being top businesses, which we had back then, but now top businesses with top market shares and growing that market share and being the most respected among the customers. That's a powerful place. When you think about it from more of an operational basis, it's all been about applied technology. So we had 300,000, 285,000 people when I became CEO. We went up to peak of 305,000. We have 213,000 to 250,000 or so now in a bigger company.
Yeah.
And so just noodle on all that applied technology to change work and keep work going. And that leads you to the next 10, five, 10, 15 years. The application of technology across customer behavior and teammate work is all ahead of us still. Even though we've made that much progress, it, this stuff's still growing. So, you know, our digital activity just keeps growing. And so you know there's so much more to do to provide better experiences for trading clients, for commercial clients, for wealth management clients and consumers, but do it with less human content, which makes it more repeatable, more controllable. Driving perfection operational processes, but on top of that, providing greater delight and greater market share. It's quite a place to be.
Okay. So look, on market share, I think one of your key strategic initiatives has been the growth in the consumer bank and attaining clients through operating accounts versus other products. And I think when you were here last year, we were talking about the two to 300 basis points in market share gains that you've made in the consumer business over the last few years. So maybe you can talk about the sustainability of those market share gains, talk a little bit about the growth outlook from here, and maybe talk about some of your longer-term targets for the consumer and wealth business as well.
So I think I would broaden it out away from just the consumers on the operational accounts. In a day, we, you know, one of the core functions we provide that is what our industry does is to provide operational accounts for companies, wealthy people, general individuals, etc. And so that business continues to grow, whether it's in the GTS business, cash management business, or the consumer business. And that business, you know, we're, you know, we just keep adding accounts. So if you think of the consumer business, over the last four quarters, we've added a million-plus net new checking accounts. The attrition rate and the customer basis keeps dropping. We have been able to do that. And from the time period over the last 10 years or so, at the same time, we've gone from 60% primary accounts to 90%+ .
The average balance at opening goes from 3,000 to 7,000 and goes up from there. And all that is just a great core customer. That's what we want. And need to say, are you relevant to young people? We open, you know, our accounts at a much higher rate than young people exist in society. And so we're gaining share even among, you know, 20-year-olds and 25-year-olds and 15-year-olds. And so we keep driving that. And that's the customer base of the future. So we feel good about all that. But, you know, a million net new customers of core accounts with 90% primary plus growing the way they are, that's a significant amount of the households that become available every year. And, and that we just keep going after every year. That provides a backbone. And then you add the wealth management capabilities too.
Merrill Edge over $500 billion in assets now. Then you add the, you know, credit card and a home loan. But the core thing is to have that. And the same with medium or small businesses is to have that operational account. And that cash management business across our platform is a $15 billion revenue base that comes off the transactional side on the commercial side. So it's a big business. And so we have to own that. If we lose that, the industry doesn't have the competitive place it has.
I mean, do you have a sense where that million of net new checking accounts comes from?
There's always household information some there. And then, you know, I think we constantly gain market share and transactional banking away from the industry. I wouldn't sit here and say it's X or Y. That wouldn't be fair. We do. We keep track of it, so.
Okay. Let's talk about the investment banking and the trading business because those have also grown very, very well over the last few years. Again, I think on our calculations, it's 200 basis points plus of market share just in the last few years in those businesses as well. So where do you see the biggest market share gaps from here when you look at your investment banking business and your trading business? And what is your appetite to put more capital into the trading businesses today, you know, just given the tremendous amount of client demand there is?
Well, so staying on the Global Markets business, and so if you go back over a period of time, Jim DeMare and team have done a great job working with a lot of the clients out here and growing their market shares. You said we just updated the board this morning on our board call before we got in here about the business. So it's visualizing the pictures of that. But it's really, if you think about it, you know, through coming off the financial crisis and then getting it all leveled out, dealing with all the new capital rules, dealing with all the new data requirements and posting requirements and all that stuff, what you hear is about in 2018, 2019, you started to hit the place where we could say we're gonna invest. We took the balance sheet from $600 billion to $900 billion.
We took the capital from the high 30s to mid-40s. And all during that time, he grew revenue fast enough that the income grew and returns grew at the same time, which is very strong. So where do we have left to go? There are pockets of the business we know we can do better in EMEA, Europe, Middle East, and Africa. There's pockets of business we know we can do better in Asia. There we can always do more in the parts we're very good at in America. But, you know, he's got a very detailed plan of where we can go and pick up additional business. But it's all gonna come down to doing a great job for our investment clients.
But you know, they've gone from, you know, a run rate of $12 billion in annual revenue to 15, 16 in the trading only. And that really, at the same time, they dropped the break-even cost in the quarter down by $1 billion a quarter through operational excellence. And that combination has the business get those returns up. And remember this, these businesses, when you have the consumer business, the wealth management and turn on capital are, you know, in the midst, middle of what your returns are. But on the other hand, they're great countervail and they provide great services even on FX for consumers and small businesses. They're making that all happen. And it's a lot of profitability. So we feel very good about that business.
Investment banking, it's really just that you go by country or by industry, by region, by country. And, you know, Matthew and the team can drive it. And we're sitting at number three. And, you know, there's certain areas that we need to keep building out. And one of the biggest successes there on a relative basis, and it's a meaningful contributor, the middle market effort we put together, we went from 60 people doing it. Now we have 260-275. They get about, it's about 30% of the revenue or more in our investment banking fees come from middle market customers, which is a big deal. And that's up dramatically. Growth 30% last year and will continue to grow. So there's a lot of opportunity there. So that's more literally industry by industry look.
But the markets, you know, fundamentally, Jim's done a good job and we'll keep feeding them. But, you know, you always have to be careful about that dynamic relative to the whole company because the G-SIB kick in and stuff can add capital requirements.
Then on the primary capital market side, so M&A and ECM, have you seen a significant change in either client dialogue or pipelines, since the election? How quickly do you expect the M&A and ECM markets to pick up as we head into next year?
If you sat here in July, they would've thought; assume you sat here in October, they would've thought the fourth quarter would look like X. That looks better than X and stuff has actually come through the door, which is important, so and then the pipeline building is high. And that pipeline is; you had a full pipeline. So it wasn't like you didn't; it just, when you probability weighted that from a real practical viewpoint, it was a $5 billion-$10 billion transaction. The idea of whether that would actually get announced and done was interesting. And now people are ready to go, and so you start to see stuff drop in place and the discussions pick up. So there's definitely that activity. Equity capital markets; again, you're seeing a little more activity.
I think that's gonna take a little bit of sort of valuation alignment ultimately for the IPOs to get out, do well, and then others will follow. And so you're seeing that pick up a little bit this year. But it's very, it's very narrow. The industry has to be profitable. Companies are stuff attached to AI basically and fueled for. And I think that might change as it broadens out. But, you know, but I, everything they do, you know, seems to, there's just a lot more activity going on, obviously.
Okay. So, so let's talk about the nearer term. Can you just give us some high-level thoughts on the fourth quarter? Has anything changed from the last time that you spoke, either in terms of net interest income, trading, investment banking, or anything on expenses or credit you think we should be aware of?
So I think just starting from NII, if you think about the, we said, we think about, you know, this time last year, we thought we'd trough in the second quarter. We did at 13.9. Third quarter, 14.1. We said this quarter it'd be 14.3. We feel very good about that. But the important thing is we look at next quarter, you see another move up the steps. And so when we get to January, we'll tell you. But what you're seeing now is just quarterly progression up a ladder. And that number will continue to go up. And that comes from really a couple things. First, you know, loans are growing about this quarter. We're seeing loan growth so far that would annualize out to 4%+ better than what we see in the industry.
A little better on the commercial side, obviously the mortgage market's still not strong, but that's good. So we're growing faster in the economy than that. Deposits, we're sitting about $30 billion up over the end of last quarter. And that's holding. The good news in deposits is this will be the sixth straight quarter of growth. But what's happened is we're actually running off anything high cost that was more sort of institutional related that you put on just to build liquidity after the messes last year. But you know, that is all now being replaced with core deposits. So the consumer business sitting at $940 billion in deposits is basically stable and moving north. The wealth management business at $285 billion deposits has been stable even with all the repricing and all the stuff that happened early this year.
The banking business has been growing in $550 billion-$600 billion. So we're up $30 billion. So this quarter we'll see how it ends up. But that's, that'll be the sixth consecutive quarter of growth. You put that together, that gives us more confidence in NII. The rate structure we have would be basically follows the market. So our view is that we'll still, we'll see good increases sequentially every quarter for next year and just keep building on that ladder. When you go to the fee side of the house, you know, so I think, we have, you know, three dominant parts of the fees. The wealth management fees year-over-year are gonna be up 20%, which is good. The, investment banking fees, again, going to your point, we probably came in this quarter thinking we'd be, you know, pushed to get to $1.3-$1.4.
We're higher than that now. We'll be up, you know, 25% year-over-year. And that was from fourth quarter last year, fourth quarter this year, up sequentially. But it's the basis building under that. Now, we should all keep that in our minds. $1.4 billion, $1.5 billion. You remember that's where we ran at in 2019. So we had this big run-up around with all the refinancings took place in the, you know, post-pandemic. And it came down and now it's back up. But normally the size of deals is bigger. So that should keep growing. And we feel very good about that. And then on trading, Jimmy will pass the 10th or 11th straight quarter of year-over-year growth, and it'll have a record fourth quarter. It'll be up probably mid-single- to high single-digit percentage from last year.
We had a pretty good quarter last year. He's been on a stair step, but this will be a record quarter for us. So we feel good. And then you look at the other things, credit costs, we said they'd be flattish. And that's what's nothing's going on in credit that's interesting. And then on expenses, you know, the core expenses are fine. The headcount's fine. But the reality is when you see this kind of stuff comes through the markets business, the pressure we have expenses of, you know, we thought we'd go from 16.3% to 16.5% and we might be up another % this quarter. But that's all gonna be related to the revenue. And that's a good thing. It's we've gotten through all the other stuff and we're kind of stable on headcount.
But the wealth management revenues coming in the quarter, nobody predicted the market would be where it is today unless you had a better mirror than we did or better.
I wish I did.
Yeah.
So maybe we can talk about loan demand because I think that's really interesting that you've seen that pick up in loan demand. And I, I know you started talking about corporate loan demand, picking up back in October. So it does seem like that trend has continued. So can you talk a little bit about what's driving that? But I think what's more interesting is you've seen a dynamic that's a bit different to the industry and to your peers. So what do you think is driving that, that differential at Bank of America versus the industry?
So I think in the small business area, we're we continue to see strong growth. So think of that as $50 million revenue in under companies. And in mid-markets, you know, the global commercial banking, that's where our real estate book is. That's down. The rest of the business is up. If you look in the GCIB, the large corporate business, that's been growing, especially outside the United States. And then in the markets business, they have a fairly sizable loan book there because of what they do for accumulators of assets and things like that. So we feel good. So it's across the board with the only exception, the exceptions, commercial real estate down because that has been running down. And, you know, mortgage is dead. You know, they're not going anywhere. So you're producing about what you run off.
Everywhere else you're seeing some credit card growth, no home equity growth. You're seeing a little auto growth. And so we feel good about it. On the commercial side, it's really driven by line stabilization. And then some people terminate out loans and stuff like that. So we feel pretty good. And the team's done a good job. Bruce Thompson runs the credit stuff for us behind Matthew and Wendy and Raoul and Sharon and Jeff. And they, you know, they're hitting the bid. And we're, you know, we're getting more loans and we're actually still gaining a little spread at the same time, which is good.
Okay. So let's talk about the deposit side. You talked about that too. So maybe you could just unpack a little bit more what you've seen post, or around the rate cuts, both in terms of, customer behavior, how's repricing tracking relative to your expectations coming into this, rate cutting cycle? And what does it tell you about terminal deposit betas relative to other cycles we've been through?
So if you look across our deposits, in the various business, if you go to the, you start with the corporate business because that's the one, you know, the large companies, those things move at a percentage of treasuries and it just moves instantaneous. So rate cut comes, boom. You might have a little tail to that. And, you know, in a non-interest bearing, obviously as rates come down, it goes up a little bit because people have to leave more non-interest bearing to pay the fee side. So you'll get a little bit of lift there. And that business, they've been growing very well overall in total deposits. And that cash management business in there is terrific. We just announced on the CashPro, which is this portal we built, you know, CashPro it's called.
We just passed $1 trillion in payments initiated. I think you can do them off your phone. We've had $1 billion payments go off of somebody's watch, actually, believe it or not. And so this is a pretty slick thing. We're over $1 trillion, first year over 20. That cash management business is a great feature function now. When you go to the wealth management, when we go to that covers all the commercial businesses. When you go to the wealth management business, basically a lot of us reprice some sweeps early in the year. That's been through the system now for a couple quarters in the past.
So just briefly on that. So yield-seeking behavior has just.
It's just basically flattened out.
Okay.
We were running $280 billion-odd, you know, bouncing around like this. And what happens is the highest end that price is down. But there's a lot of zero interest in wealth management too that doesn't move. And so we'll see. And then in consumer, we're at 66 basis points all in, I think, last quarter. And that has some CDs and stuff that will run down. But most of that is so low priced that it doesn't move a lot. But all in all, you'll see. We've seen the deposit for the month of November. You keep seeing pricing coming down. There's a little lag effect to it, but you'd expect if you didn't don't see the mass of, you know, 50 basis point cut and 25 coming through. It has largely to do with mix than it has anything else.
But against that, you'll see the NIM of the company start going up because on the yield side, you're getting an increase, a deposit all-in cost is going down. And the yield side increase is a lot bigger and coming up a lot faster, frankly.
I mean, if we put some of these pieces together, you know, what is the NII outlook for next year if we build in the asset repricing and tailwinds that you have, you know, and how should we think about the impact of a potentially steeper curve when it comes to net interest income for 2025?
I'm sure a lot of my colleagues said it didn't hurt. You should think it doesn't hurt. But I, we'll talk more in depth about next year when we get to the first quarter because we want to make sure that we try to keep it sort of organized and when we talk. But 13.9, 14.1, 14.3, and you just expect that stair step just to keep going up. You expect every quarter. And I think by the first quarter of the year, every year is growing. I think it's, it doesn't happen this quarter. I think it's the first quarter we start to see year-over-year growth. And so you have link quarter growth and year-over-year growth. So if you sort of play that out, it's the NII has to grow next year.
Okay. I mean, long term, you've talked about a 2.3% net interest margin. Can you talk about the type of environment from either a rate perspective or a loan growth perspective as well as the timeframe that it takes to get there?
I think, so we're sitting at two now, you know, 190 something moving up. And so that'll come through. It takes some time. But let's back up and ask the broader question. If you look at the deposit base and the asset yielding base in the company, and you go back and look at the last time we had a Fed funds rate, you know, above 3%, you can see you get pretty excited about that NIM spread. There are two caveats. That one is you got a mix of markets business, which is a different calculus in that. And so that changes a bit. And then second, and that's a bigger percentage of the company was Legacy Bank of America before Merrill now, tied.
And then the other question will be, you know, sort of what, what long-term deposit pricing would be. But if you sit there and say we're growing core transactional accounts, the rate we're growing across all the businesses, and there's core non-interest-bearing, we should be able to close that, close back to that level of the next couple of years. And just keep, and the question is how far it goes. We'll have to say what the economic scenario is. But as long as the short end of the rate curve three-ish, whatever, and the back ends in the four and a half, you should see this keep being a very good place to be. And that, that's dictated by the zero interest. That's the piece that drives it.
Remember, we have consumer 66 basis points all in, in 2019 with a two and a half Fed funds rate and a cut. I think they were 13 basis points. So they'll get 50, but they won't get, you know, there's only so much you can get. But they will work their way down to that because that's what happens. And then wealth management will be a mix of that and the corporate segments, right? The market and the other stuff. Small business is very valuable too. Yeah.
Okay. So let's talk about expenses. Maybe you can just talk about some of the broader expense categories heading into 2025, how we should think about the ability for you to offset investment spend with efficiency initiatives. And then I guess longer term, you know, you've got a very, very good track record of driving operating leverage. Obviously, the last year or so has been harder. Should we expect a resumption in terms of your ability to drive the type of operating leverage that you've done historically?
Yeah. So starting at the back to the front, yes. Because as the NII kicks up year-over-year and it starts to happen next quarter, you'll start to see that operating leverage come in. Because that's the piece that was missed as we fought the NII curve down and even stabilized, you had to go in the other direction. In terms of expense growth, look, we, every company, every operating entity in the, in the country, in the world had to have a big inflationary period and the wage growth accumulated and, and all that to keep it all working and the, and the third party costs and everything. So that's all through the system. What you're seeing is a flattening out of that. So that's good news. The headcount's flattened back out. We're carrying about 213,500 heads. We had about 203,000-204,000 pre-pandemic.
Some of that's investment and growth in business, like a thousand more people in the investment banking franchise. Some of that is just kind of getting everything reset and getting the productivity back. And so we're getting that back. So what you should expect is expenses will start to go more rationally with, you know, with the growth in revenues and the operating levers come back. And our goal always is if, you know, the inflationary environment's 3%-4%, you know, we should grow expenses about half that rate. And that is by saving a couple % and investing 4% or 5%. And we'll see how that works. Right now, as you look forward, we expect that dynamic to take place. You'll see nominal growth, which was unusual for us because we were coming down.
But what you'll see is that is a component of the inflation, less the savings, plus the investments. And so that number for this year, you know, mid-60s, 60, whatever it is. Think about that. That's where we were nominal in 2016. So we've done a lot of work as a company and, and we're investing. Then we were probably $2 billion-$2.5 billion in technology network four. Then we were probably three quarters of the marketing cost a year that we have now. You know, and then whatever inflation occurred in the last decade. So in terms of people and talent and everything and the markets being up. And so we, we can manage expenses well here. We'll see operating leverage come back.
But one of the things we'll have to get used to in our own mind, and what we'll get to is we will grow both expenses and revenue because in the end of the day, we take it down so nicely that you kind of have it where we were starting to do that. And then the pandemic came and everybody quit talking about it for a while. But we had started, we got an operating leverage for five years in a row. But the dynamics were starting to change and that's the dynamics we expect to see. So operating leverage for five years, a break, operating leverage for five or six quarters. And rates change, and rates stabilize and you're seeing operating leverage on the other side. And, and that'll be the dynamic of, you know, four, four, 5% revenue growth, two or 3% expense growth.
But that 200 basis points is a lot across our base. So that's.
I mean, just as a follow-on to that, you know, you talked about the, I think roughly 100,000 reduction in the employee count since you've been CEO. I mean, when you look at the opportunity set from automation and AI from here, I mean, how excited are you about that relative to say, you know, one or two years ago?
I mean, the whole concept of automation is still very important to us. And so AI is another automation technique on top of all this other stuff. So we gotta be careful because the automation coming through and all the other stuff is actually there. So if you look at AI in our company, Erica is AI. It is a virtual system. We built it starting a decade ago. It's been operational for about six or seven years. It saves 3,000 people as best we can calculate now. And that's pretty good. But its width of activity is X. So we keep explaining that with what it can do in consumer because you have to have very tight control over it. This idea you can just let it go out there doesn't work.
So, 'cause people want the right answer very precisely, very fast, and now, and perfectly accurate. And that is not, let's put it in the model and see what happens. But Erica is still growing, you know, usage 5%-6% a year and users five or 6% a year and usage, you know, double digits, you know, and 15-20%. We took that and put it in our tech support. We're already down 40% of the calls and it's like over 90 days. So 100% of the calls went in for people calling about break fix or I need this. You're down 40% because it's a very controlled set of activities. I need to change my password. I need to do this. I need to, and so there's real places that can apply.
We then took that same stuff and it's actually in CashPro when there's several hundred thousand customers that talk to us using that as opposed to pick up a phone or send an email that has to be responded to individually and it can be done. And then we've taken that into helping us, you know, draft credit offering memorandums, which are, you know, this thick and have all the spreading in it. So we can see this apply and then you take the better techniques and things. So we'll keep applying it and development. We have a thousand plus programmers developing today into production. And that number will grow exponentially in the near term up to, you know, we have 35,000 total programmers, but they're, we had to make sure it worked.
We could put it in production, we could test it, we could, and then now once you got that figured out, you can go. But you know, if you think the other thing, so Erica's a small language model in the parlance. But if you think what else is going on is at the same time we're all figuring that out, every software provider is embedding in their work. And that's the change. So, you know, so the Salesforce team and Agentforce or whatever they're calling the activity, you know, that is embedded in the platform. We already are set up to use Salesforce across all our groups. All the data is perfectly arrayed. It all goes through a system. We all know it. And now suddenly you can just start using it, right? As opposed to I gotta build a model and test it.
So there's a lot of stuff that can go on here pretty quickly 'cause, you know, you know, Salesforce, et cetera, et cetera, all be embedding this into their stuff. And so you've got the standalone models, big standalone models, small software providers embedding it, and all that will impact us. And, and so we're sitting here saying we're very excited by it, but you gotta, you gotta be absolutely precise in what you're doing and how you're doing it. 'Cause our industry has 100% accountability for every answer we give in current law without, you know, explanation of the model in it. You know, and so literally you have to be very, very careful. But we've already proven it works. So we're very excited about it.
Okay. So I think you mentioned on credit, there's not a lot to see, but you know, is there anything that you're monitoring more closely or alternatively other areas where you think the market isn't pricing the risk appropriately? And then more broadly outside of credit, you know, what's top of mind when it comes to risks heading into next year?
When we look at the credit, you know, on the commercial side, it's all gonna be leverage and we try to keep our credit underwriting within our standards. Sometimes we win, sometimes we win a deal, sometimes we lose a deal because of that. We feel very good about the commercial book overall. In a broad sense in the commercial real estate, you just see the payoffs coming and the balances are dropping and the criticized assets now flattened out. We had to put a bunch on criticized 'cause the OCC change interpretation didn't mean anything to do with the credit other than just, and that flattened right back out. That's good. That's good. Then on a consumer, at the end of the day, it's for us, we're prime auto.
It's never; it's not really a charge-off issue ever. Delinquencies are very low. Charge-offs are low. Our credit costs and consumer side are all credit card. And so, you know, but they've come up and flattened out where we thought. So the underwriting we're doing in this environment ought to be good. So what are we worried about? Consumer side has to do with unemployment. And unemployment, you know, the estimates, you know, come out, keep pushing the 4.1% further out in the future to the 4.3% move that we all talk about that won't make much difference. But if we go from 4.3% to 5.3%, that's a difference or six point. But our book's built to withstand more of that, because it's high credit and it's core customers and we have deposit accounts and we really pay attention to it.
But we watch that 'cause that's unemployment driven. And on the commercial side, it's gonna be how much leverage a company takes, their business plans and execution. But you know, when you have a broad base before, like we're just not seeing it. I mean, everybody talked about normalizing and credit costs are rising in the industry and, you know, we're gonna get back to 2019. When we were in the middle of 2019, I remember asking the head of our credit risk that worked for us, I said, go find out what the last time we charged off this low an amount. It was 50 years before that. So, I mean, you know, it was a pretty good time. So we feel very good. Do we worry about every credible horror you can imagine out there?
We worry about it all the time. We test it, we stressed it, you know, all that stuff. But, but the reality is what you're actually seeing in real behavior as opposed to what could happen is very constructive.
So I know we've only got a couple of minutes left. So let's talk about the regulatory outlook, you know, and a couple of questions here. I mean, the first is, what do you expect around the Basel III End game? Do you think it's going to get finalized? Is that something you would like to see happen? And then linked to that, you know, given that we may not have clarity over what the capital requirements are gonna be for some time, how are you gonna manage capital for the firm, you know, around that uncertainty?
So, you know, right now we're sitting at 11.8-ish, round number CET1 ratio. Even under the, you know, so you had the first proposal and then you had the speech and even under that, you know, we were mitigated a lot because of some of the changes. So we had more capital we were gonna need. So we're not using that. We're just buying really all the marginal earnings, $3.5 billion this quarter. We'll continue to push that up as the earnings go. We gotta, we wanna have capital to grow, and yet, you know, the amount, the demands are not that high. When you think about it more broadly, I think the United States has to finalize Basel III so we just don't leave it open. So we have this discussion. It's been a decade. Yeah.
At some point we have to, you know, get to an agreed number, one that works, one that's rational. Our industry in America is so RWA intensive, capital levels intensive relative to anybody in the world that if we agreed to anything, we'd be Basel compliant, for lack of a better word, and the mistake we made is we kept talking about equivalency from standardized, you know, Lincoln rule, like, you know, all this stuff with not from advanced, and you know, from advanced, you know, these moves were huge, and then we were, we were sort of talking from the wrong thing, so we feel good about that. I expected we need to finalize.
I don't know what the regulators will agree to once they get the new people in, but we need to finalize it without much impact, honestly, with very little impact because it's good to put it behind us because this is the best capitalized in the world, and yet we keep having this debate about capital levels, and look what happened. Pandemic. The banking system led the system through it. The regional banking system led the system through it. So the idea that we need more capital when 2016, they said the capital's about right. And 10 years later we have probably 25% more capital. You're saying this is just getting the, and so we need to settle in just to put it behind us.
Okay. Final question. You know, obviously bank stocks have outperformed a lot since the election. From your perspective, is it rational exuberance or irrational exuberance?
From Bank of America's perspective, it's really, really rational exuberance, but you know, look, our industry multiple is still kind of average, you know, in the world. And if you go to long-term averages at 12, we're all, you know, there's higher and lower, but it's really gonna be earnings growth that's gonna drive it. And what I think people see in this industry is the potential for earnings growth for all of us, given a stable interest rate environment, a stable economic environment all ahead of us, but the multiples in our industry are still relatively where they've been a lot of times in history. It's not like, so our stock's always cheap. I'll let other people decide what their stock is.
But the reality is, we're not, the valuation didn't shoot up to, you know, 15, 18 multiple, and we're sitting at 12-ish industry average. That's, we've been there many times before.
Okay. That'll be a lot of time, Brian. Thank you for coming.