We'll go ahead and get started. Welcome to Bank of America's 34th Annual Financial Services Conference. I'm Ibrahim Poonawala, Head of North American Banks Research at BofA, and it's a pleasure to welcome you all. I would like to thank all the management teams and investors for their partnership, which has helped make this conference such a success. As part of the conference, we are hosting over 350 institutional investors, more than 130 corporates, and a number of timely and thought-provoking thematic panels. We hope it'll be a productive few days for everyone here. I would also like to thank my colleagues in the research, Craig Siegenthale r, who's sitting up here, who heads the coverage of our diversified financials, asset managers, brokers.
Josh Shanker, who Heads our Insurance Coverage, Mihir Bhatia in Consumer Finance, and Matt O'Neill, who just joined us recently and will be launching on the payments and IT services sector. So that's gonna be a tough one to launch after the last few weeks, but before we get started, please save the date for next year's conference, which will be held February 8th through 10th. As always, none of this would be possible without the blessing of our next speaker. So without further ado, it's my pleasure to welcome our keynote speaker, my big boss, Brian Moynihan, Chair and CEO of Bank of America. Brian, thank you very much for being here. And I should have said, Brian is joining us fresh off a Super Bowl loss for the New England Pats. So I promise Lee no hardball questions.
You know, your bonus check hasn't cleared yet.
It hasn't cleared.
So you can remind me about all that you want, and I can remind you about other things, but.
Well, we do have a good relationship, as you can see b ut s o far.
It just got worse. So maybe I think, Brian, just to start out, there's lots of optimism, at least coming into the year on the macro outlook. Maybe give us a sense of like, you were at Davos, you're talking to CEOs, you're looking at all the internal data at BofA, just kind of what the expectations are. Does this macro backdrop look as the strongest you've seen in many, many years? And where are the soft spots, if any?
Yeah, so I think you have to go back and think about a little bit of the last 15, 18 months, because, you know, as we came off the election, you know, our team, your team raised their estimates for 2026, in the mid-2s and, you know, we're enthusiastic of deregulation and tax policy and things like that. And then we came in the first part of the year, and the enthusiasm was confused more than anything by the Inauguration Day and tariff policy, et cetera. And by the time we got through the year and exited the year, you know, you're back up at 2.8 for GDP for 2026.
So the important thing is the number obviously being nearly three, but the important thing is, it's been, I think you guys have raised it every month, you know, every new thing every month for the last six, seven months, which means it's building. So that's good news. What's come out of that, when I talk to the CEOs around the world, and I hosted a bunch of sessions with different CEOs, plus some of the administration members and CEOs talking about U.S. policies.
They see the trade tariff, you know, sort of except for the cases of national security-related stuff or certain things. They see it's basically working its way through and the deals are getting done, and the outlines are not that impactful. So they're getting used to that. They see the tax, which is a big deal, and the bonus depreciation, locking it in and guaranteeing it, and they're now seeing the deregulation finally come, and it takes longer to get that because they're trying to settle now. So they're very enthusiastic, and they look at America, and they say, "This is a place to invest," and they just needed some stuff to fall in place. And then obviously, in the trade deals, they're supporting their countries.
Okay.
Because their countries need them to help make the commitment. So we feel very good. Now, the real question is what's going on in the data? I think, you know, for a fairly long period of time, our research team was, you know, giving their estimates, and then, you know, the world out there was saying: The consumers are gonna quit three, four years ago after COVID. They're gonna spend their money and quit. Didn't happen. You know, earlier last year, after inflation, the consumer is gonna quit. Didn't happen, because prices could rise. Didn't happen. The consumers in January spent 5% more money at Bank of America, pushing the economy than last January, and that's consistent with the growth rate in the high 2s and if you look at it. If you look at it, it's across the board.
All the cohorts, you know, low, medium, and high-wage households all grew at different growth rates. So there is some—their K-shaped economy is real, the affordability question is real, but it's all growing. And so for a long time, we have been looking at what people do, not what they say they're gonna do. And you're finally seeing other people recognize that. Because of all the stuff that goes on around them, they may feel—say they feel one way, but why would cruises be up double digit month after month after month if people really thought they were stressed? So why are they not stressed? I, I looked and not only us, but all the street economists for the major firms, some of which are in here. Nobody has an unemployment rate for all 26.
It gets above, you know, maybe four, six, the highest out of all the different possibilities for every quarter times to eight or 10 firms. You know, everybody's, you know, So people are employed, wage growth, interest rates are gonna continue to come down, and, you know, that's very constructive. And then, on the deal side, the IPO markets, leave aside the ups and downs of software and all that things, you know, the IPO flow, the deal comments, especially in this industry, are strong, and so people feel pretty good.
Just maybe, very quickly, you mentioned the K-shaped economy, the consumer affordability issues being front of mind for the administration. Like, when we think about one of the proposals that was kind of put out there on our credit card cap j ust, I'm just wondering what the conversations have been like there? Like, what do you think the industry can do there?
I think the, we all. You know, they got, that arrived around earnings, and we all reflected on the implications of lowering credit availability, dropping people's lines, impact on the economy, impact on ability to, of people to have the flexibility to spend and stuff. That's all been made. I think at the end of the day, you know, we're all for affordability. So in our company, on our consumer side, if you look at what we've done in the last 15 years for, you know, the overdrafts, you know, limits and down to $10, and, you know, 40%-50% of our accounts are no overdraft accounts, and we're up to, you know, I think double digits millions of accounts now, no overdraft capability, therefore, that's a more affordable account.
We have a loan for $500. Eight million customers, I think, have taken advantage of that loan in the last four or five years, where for $5, they can buy up- buy up to, borrow up to $500, no interest rate for short-term borrowing. That was to really to push out the payday influence in our customer base. If you look at, we have low, no-frills credit card, for lack of a better term, annual fee, no rewards. Yep, the rate's low, not quite that low, but lower.
And I, so I think people are seeing that this is a much more complex question, and, and we'll see it play out. But I, the question of affordability, we believe for American consumers in banking, we are the most affordable company. You know, if you look at the FDIC stats, you know, we run the most efficient consumer business, make a lot of money, but we do it through a very low cost to the consumer thing, and so we believe it.
Right. I guess maybe another thing in terms of the macro, before we jump into the business, we've argued that as folks who've lived through the financial crisis, what you're seeing on the regulatory side, which I'd like to characterize as back to some level of normalization-
Right.
Is playing itself out, and it's a regime shift. Like, how do you see it, like, relative to the last 15 years, and where, where do you think we are on sort of additional regulatory changes?
So I think if you think about the travel coming out of the financial crisis, there were key things that had to be taken care of. We had a bunch of companies that were outside the tent, t hat had an amount of leverage that we had got put inside the tent. We had to bring them all their capabilities. We had the people that were inside the tent from the start. You know, what's the amount of capital required, liquidity requirements, et cetera. So all that came through.
And we were kind of done with that by 2015 or so. But what happened is, you know, it just kept coming. And so over time, and people think it's, you know, the first Trump administration, Biden, but this goes back before that. What happens just is there's constantly creeping on the capital liquidity, not indexing G-SIB from 2012 data or whatever it was supposed to be. Economy's probably, I don't know, twice as anomaly had growth, and, you know, all that just didn't do well. And so with the current administration and with the vice chair of supervision, you know, she has looked at this. By the way, the last, you know, we were getting there with Jay and others before. It just, it just had gotten sort of out of hand.
And so that, I think you can see the path forward. I think the good news is they're taking the time to get it right, so doing a cost-benefit analysis in a way that ought to stick to the ribs, as opposed to being able to be swung back by somebody else saying: "I just want to change it." So that's, that's good on capital liquidity, et cetera. The other major thing, and I think this is important for all of us that operate banks, is this supervisor operating procedures and things like that to go to materiality.
This is a huge benefit to the banking system because, you know, I've been in discussions with prior people in the supervisory regime, where if we do something 10 million times a day and you find a mistake, you know, one or two, and they say: "Well, that's a problem." You say: "Well, are you expected to be perfect?" "No." Well, you find two, and they say: "But that's a problem because we found two." And you're saying: "But you're way in the error rate of Six Sigma levels." So you're gonna find some mistakes. The question is, do we have a process that runs a Six Sigma? And do we check to make sure it's running a Six Sigma? And then when we find a mistake, we fix it.
You know, that would end up with an MRA in it, right? I think that tone change is actually more as critical as anything else, because if we get that right our system will be much more sound than any system in the world in terms of the, a proper balance of regulatory reach. That doesn't mean we're all ears for best practices, improving procedures and stuff. But if you look at what happens with the formality around MRA, and by the time you get done with 1,000 reports and all that information, it just really is not, if it's not material, it's not. And that. So people in the outside the companies won't appreciate this as much as inside the companies.
And if we can get this right, that'll be a great thing. So capital, liquidity, et cetera, you're seeing that all come, stress testing. But the real question is, we can get the balance back where supervisors on credit gave you insight and didn't try to write up, you know, immaterial things, and have the license to do that and won't be criticized after the fact. Because the unfair thing is, something goes wrong, everybody says: "Well, you missed it. That's not fair, because if you're gonna have them have a balance, you're gonna expect banks to fail. You know, we shouldn't be shocked when that happens.
Right.
The system is set up to have that happen. That's why we guarantee the FDIC, so it can happen without having customer impact.
Got it. You mentioned the G-SIB. I guess there's expectation around the G-SIB recalibration, Basel Endgame. Do you think we'll see the proposals anytime soon, or?
I think they're coming, and soon.
Okay.
But I think, you know, they're trying to make sure they've got them really well researched, well built, so they withstand scrutiny, not only in the instant case, like right now, but they withstand, you know, two, three, four, five, 10 years from now. And I think they'll be constructive, and I think she's outlined her thoughts, and they're just doing the work the right way. And I think it won't be everything the industry wants, you know. It will not be like, I'll just go back to, you know, low tangible common equity stuff, and it shouldn't be, honestly.
Right.
But so we'll be arguing about some finer points in life, and, you know, Greg Baer and Rob Nichols and our colleagues are here, and they'll be making the points for us. But it, you know. But so don't, you know. But I think it'll be much better than the constant creeping. And over from 2019- 2024, I think we showed on data, you saw the capital requirements go up by 20%, and the math, it wasn't apparent to anybody they'd gone up. It's just the math behind the scenes was picking at you.
Right.
This RWA calculation. And that—so it was very subtle. It went up, and there was no more risk in the industry from 2019- 2025.
Right.
Of any consequence.
We have both Greg and Rob joining us for a panel later this morning on that, so it should be insightful. Maybe, I guess, switching focus to the business, Brian. We held our first investor day in a long time, laid out the return on tangible equity targets. Just frame that for us. I think the target 16%-18%, I think, as we think about the timing of getting there and what gets us to the lower end versus higher end, just how should investors think about that?
Last year we did 14% plus. It was up 100 and some basis points from the year before. And what you're seeing is the NII, net interest income builds. You're seeing a lot of that flows through the bottom line, and that, we say this year will go 5%-7%. Well, 200-300 basis points operating leverage. So it's, you know, that just kicks in because the NII is, as Alastair showed Investor Day, a lot of it is a repricing characteristic. And then, you know, mid-single digit loan growth and, you know, sort of, you know, 2%-3% deposit growth, which we, we did 8% loan growth last quarter over the year before. So we feel good about that.
And so that 16-18, we reached 16, we believe, after eight quarters, this being quarter one. So, and then we reach the higher end of that range after at 12 quarters, and we try to make that clear to people. And but it assumes, you know, the economy keeps up, pushing along at 2%- 3% growth, inflation stays in check, and, you know, et cetera. It does count interest rates coming down, so that's factored in whatever the curve is. So we feel very good about that. And but the important thing is, we want to show people this. We've, if we manage this company very tightly on expenses and head count, and so people are getting paid more, but from 2015- 2025, we have the same numbers of people.
So just noodle on that. Company's probably 50%, 30% in certain areas, bigger. Their people are getting paid more, but we have the same number of people, and we basically have. We went from two, at that point, 213 down to 205, I think four, or something like that. Then we went back up to 218, we're down to 213. This quarter, we're down, and this month, the month of January, we're down again. And so we're engineering out that stuff. We're investing heavily.
From that time to now, we probably invest $2 billion a year in technology development, more than we did back then. From that time to now, obviously, the incentives for the wealth management teammates who do a great job, their customers are a lot higher. From that time to now, you know, the clearing expenses and the markets business are higher, but we still end up with an expense base that's growing a lot lower than the rate of inflation, and the headcount is flat, which sets us up to be able to manage the expenses going forward.
Got it. I do want to come to the headcount and just how AI is influencing all this, but maybe, Brian, when we think about the revenue growth momentum, be it the four large sort of business segments like, where are you seeing the most energy, and where is the capital or investment dollars being deployed?
Sure. If you think about consumer, you know, that is a place we've gone from 100,000 people to 58,000 people, just to give you a sense. 6,000 branches to 3,700 branches, even though we built out a lot new branches. So it is all about, and especially in the mass customer side, mass market side, driving the expense through digitization through automation, et cetera, while growing core primary checking accounts, which drive the economics.
And so we've driven the deposits over the last, you know, 15 years in that business from $350-$400 to $950, and so we feel good about that. So the growth level going forward, those primary checking in the mass, in the mass consumer continue to grow. In the preferred business, which is the upper end of that, that is a revenue growth business, and that's driving that. So the dynamics in that are how do you manage the headcount and expense carefully and really rigorously, and keep automating and automating, and not get ahead of the customer, and then at the same time, drive up primacy.
We're up in the 90s, drive up customer scores, all-time highs, drive down attrition, all-time lows, both by employees and customers. That business then has, you know, I'll even say it's got double its income, and it already earns a lot of money. So that's that business. On wealth management, we made it a Lindsay, and Eric, and Katy on the moves, their view of net new asset growth up from, you know, 2%-3% level, we're now at 4%+. And I think, you know, they're busy at work making it happen, and what we're seeing is a Merrill Edge piece helping that because it's growing pretty well. So that team set up, what they're changing is recruiting a little bit more strategically. They are also driving the connectivity of the franchise.
They're also, which is powerful across the 100 markets we serve and all the local markets and all the work they do, here in Miami and elsewhere, and, and so that's going good. But we're also able to get, because of the efficiencies and some of the AI, some of the other things we're applying, just in more, you're allowed to get, you're getting more, customer ability to do a great job for customers without increasing the headcount a lot, which is important. So they're seeing that.
On, on global corporate investment, commercial, Global Commercial Banking, global banking across the board, look, we're adding bankers in business banking, in, in, in middle market across America, and the markets that we're still, undersized. We try to target a, a, a ratio, a, a market share in every market. We look at the markets below that. We add bankers to make it happen. They've done a great job. The cash manager driving that business. In corporate investment banking, the investment banking team was up 7% last year. They're pushing harder, more in Asia, more in Europe, kind of continuing to push the franchise, Matthew's team. So feel good about that business, but it's, but it's really the payments piece we highlighted. That's the, the piece that, people. It gets lost because it gets divided in businesses.
Right.
What Mark Monaco runs for us, the huge payments architecture, drives them a lot of profitability. In the market, it's 15 quarters of year-over-year growth. And now Denis and Soof, you have to drive that business for us. Done a good job. You know, it's more with each customer, and it's. You know, these are not strategies which you could write down, but the execution discipline of 15 straight quarters of year-over-year growth, nobody's done that. And guess what? Spoiler alert, I think they'll do it again this quarter.
Good to hear. Okay. So there's some news for you. Okay, and maybe just double-clicking on some of the things you mentioned, I think one-
Actually, just in the broadest thing, if you think about just the, you know, the other, so think about what we did as a business lines, but what you thought as the platforms. So whether it's the EB I platform, employee bank investment platform, or it's just payments platform, whether it's AI and how it's already deployed at Bank of America, we talk more about that.
We tried to feature these platforms that people get lost, you know, don't see as clearly and watch that, you know, they're up and operating, they're hugely scaled, they're market share leaders, and there's opportunity. In our 401(k) business, I think we're sixth or seventh. That business is growing a lot faster than other people in the industry because we can go to corporate clients, commercial clients and say, "Yep, we can do a great job for you in this business." And, you know, so we can pick up the back-end flow on that and the front-end flow.
That's the workplace retirement kind of. Okay. Yep. So maybe just on consumer, like two things I wanted to touch upon. One is, talk to us about deposit growth, right? Like, to me, like, just the lifeline for banks, the oxygen is deposit growth, getting low cost. You have a lot of sort of banks talking about branch openings, promotions. It's a competitive environment. Like, how does a bank with our market share actually grow deposits in this environment?
At the end of the day, you've got to grow. But when you think about the core product set, what we call a stairstep, a checking account, then you go from there to the first sort of savings investing thing, and then the home loan, the card loan, the car loan. And so you have these stairsteps, and you're just going up the stairsteps, but you have to have that anchor account. So, you know, we were doing about 1 million net new checking customers a year.
If you look at them, you know, you look at our, even with that kind of growth, which is, you know, 3% net new, 2%-3% net new checking accounts a year in a population growth United States, that's, you know, sort of half that in the old days and now a lot less than that. You know, that's outgrowing the market. If you look at our share among young people, it's higher than they're represented by a lot.
If you look at our. So we have lots of techniques to do that to materialize over time. So the key is to have great customer service, have all capabilities to all people. And the third key, and you mentioned, is we weren't in a bunch of markets by historical accident. So our company's been around since 1784, and up until six-seven years ago, we didn't have a branch in the state of Ohio. You know, which seems like: how would you intentionally do that? It wasn't intentional. It just didn't happen. Now, we have 25 branches or 15 in Cleveland, 20 in Columbus, Cincinnati, and we're building out Dayton, and so you build that out. So we've done that. So why you have to do that is to cover the markets.
You know, that's. We have to cover all the top 100 markets, and we're pushing into that. Meanwhile, branch count keeps coming down. So what happens in the more mature markets, you're managing the distribution platform, you're watching the customer move. So, but you have to build out these markets, and, and the brand lift, you know, there's no incremental brand cost to it. And by the way, when we, you know, go into some of these markets because of the historical presence of our Practice Solutions group, which lends to doctors and veterinarians and people or Merrill or a commercial bank, we can instantaneously pick up a customer base, which is pretty interesting. If you look at our build-out of all the branches that have been deployed, I think the ones that are open more than a year are way above industry average deposit per branch already
And so we're the company, we're way above it, but they're already covered it. So our job is just to drive it. So it's about net new household growth, it's about distribution effectiveness, it's about great digital capabilities and now AI capabilities and just driving that. But we have to cover the landscape because incrementally, it's really the cost is really the incremental branch cost in a bunch of markets we weren't in.
Makes sense. And maybe just one last on consumer. When we think about the card product, we've had the preferred cards. I'm a happy customer of the card. But I'm just wondering, is just talk to us in terms of the evolution of that product. Are we doing more in terms of credit card offerings? What's the plan there?
Yeah, I mean, so I think our core strategy is, if you think about the universe of the 70 million consumers, account, 67, 65, 70 million consumer customers at Bank of America, we're focused on that stairstep and that depth of relationship, and the card is a key part of that. So we made a decision. We have great affinities with certain great corporate clients, and that's fine, but the affinity we are driving at is also the rewards program, the Preferred Rewards program, which is different because it goes across the higher entire platform.
And so that's been the focus of what we've done. So we brought that program across obviously, the wealth management businesses, et cetera. And so it took a repositioning of the credit card business over a long time to get there because so the credit quality is strong, the usage is strong, the prime—getting people to take the card out of the wallet is high. And now you're seeing we're starting to see the ability to grow, and Holly's committed to growing the outstanding balances faster. But with our credit, you know, focus, we're trying to keep the charge-offs from having a volatility. We have not had a consumer issue in the United States since the financial crisis. The pandemic, unemployment rose, but the government pushed so much money, and there was no change.
You are now 17, 18 years since a consumer.
Okay.
Break, seven, I guess, 17 years since a consumer break. And look, we charged off $50 billion in cards, you know, from seven till 10.
Right.
50. And so you have to be able to withstand, you know, that was a 10% unemployment rate. If you look at us now in our stress test, the 10% unemployment rate produces a third of that. You know, over three, and it's, that's from zero to 10 instantaneously with no adjustment, so it wouldn't come close to that.
Right. Understood. Maybe pivoting to the wealth management business. So you talked about the platform a lot. I talk to our financial advisors very frequently, and it just feels like the bank has done, under your leadership, an amazing job of, like, connecting the dots over the last decade, and the willingness of the advisors to sell credit cards or commercial banking products is super high. Just talk to us about that connection between the Thundering Herd and the bank, like how that's evolved over the last 10 years when we think about the 4%-5% NNA growth target that we put out.
If you back up, the idea is that in the Private Bank and Merrill is to you own the entire customer relationship from you, through the life cycle. And so, the advantage we have is from birth to death, you know, we can carry a customer all the way through that. And so their job, and to do that, you have to have everything. It's not only you have transactional accounts and credit with us, as obviously wealth management practice, but as a financial planner, it leads into estate planning, it does, and that locks in. So that holistic approach is often talked about, but tricky to execute. And then the second question is the flows in the business. So if you listen to Lindsay, and Eric, and Katy, they talked about the amount of flow they get from the business banking teammates or vice versa.
And so that connectivity in the market, if you go to Columbus, what got us started it was we had three great Merrill offices, a lot of great colleagues. They could start to work with the business bankers, and you build out so, or Pittsburgh, or other places, Denver, and et cetera, so et cetera.
Right.
So it's very important for that, and it'll be a beneficiary of NII kicking in, NII continuing to kick in. And that'll push them up in the pre-tax margins they have. And so we have industry-leading pre-tax margins. We're one of the biggest in the businesses. It's the least efficient business on our platform, and so one of the things we try to do, but it's one of the highest return on capital business on our platform. So the question is, and they don't really need new capital, the question is, how do I have them do what they do and compete and win in the market and who they are, but secondly, how they contribute more?
It's that interconnectivity is very high, and the teammates continue to do a great job doing it, both in the wealth management businesses and any other businesses working with them. And here in Miami, we got a fellow named Gene Schaefer, and his job is to get all the people in the market to drive that. We score every market, we goal every market. We just, I won't tell you who won, because we'll tell the teams, but we just found out the winner for last year, and y ou know, there's 100 markets are ranked, and, and it's, it's they have great fun, and then we go to the market that wins and take our senior leaders there for a meeting.
So 300 people show up in a market to support the market, and it's a, it's a connected thing, and the financial advisors and the wealth manager, private bankers are critical to that. But it's, it's not some, you know, mind-numbing thing, it's just discipline of execution, time in, time out, and also getting the, our teammates to work with us to understand the, the magic of it all. When you see us be able to handle not only a, a business sale, but the proceeds and legacy planning, you know, that's what we're here for.
Right.
As an institution. Anything short of that, we're not doing our job.
Got it. So when you think about the 4%-5% NNA growth target, is that aspirational, or do you think that g iven everything that you described should be?
We wouldn't have said it unless they could do it.
Okay.
You know, that's whether it's expense operating leverage targets, you know, we don't--we're not here to talk about what. We, one of the reasons why we don't spend as much time is, we want people to focus on the achievements and what we've accomplished. That's what to extrapolate off of, not what somebody tells you about the future. And so we told people we'd be able to operate with operating leverage after we came down the expense growth beginning 18-19, and we've been doing it, you know, this since 2015, 10 years, 40 quarters. We had a streak of five years, we had a streak of about two years, and we've now three out of four quarters.
So if you start to take 20+, I think it was, eight or ten, you know, it's 30+ another two or three, you know, that's a lot of those quarters had operating leverage. But we had to get people to flip from just expense reduction to operating leverage because, frankly, we'd taken out 100,000, 90,000 people. It was. There was not a lot of easy things left. And you're seeing that. So all those commitments were resolute about handling. We measure them carefully, and if Lindsay and Eric wouldn't have been, wouldn't have said that, and we wouldn't have let them say it unless they had a path to get there.
Got it. I guess maybe just moving global banking and markets, you mentioned, like, just consistency of revenue growth. I think as we think about year-to-date activity, like, is it started out as expected, better than, like, yeah?
Yeah, everything's consistent with what we expected. And, you know, so if you look at it two ways, it's still a month and a half into the quarter, but everything's as we expected, is coming in. The markets are getting their traditional kick in the first part of the year from all our good clients out there. And the, you know, the real question is, does the market environment affect, you know, some of the investment banking? But as we look at it, there's enough other activity-
Right.
That there's specified areas that are, you know, talked about all the time, and we don't need to get into that because it's the expertise of these people out here to figure out. But, you know, but at the end of the day, the activity around is strong. So we feel good about the investment banking, good about markets. Loan growth's where it's coming, where we want. Deposit growth is good, so it's setting up to be what we said it would be.
In the markets business, is there still wallet share to be gained for BFA? Like, can we.
Yeah, there is. It's just, yep, so if you look at it over the last four or five years, we've increased the balance sheet exposure by $200 billion. We're doing that again this year. You've got to be careful. It's the business that has the lowest return on capital in the company. Not because they're doing anything right or wrong, it's just up against some pretty stark other businesses. So, but it's important and critically important to grow the business. So the magic there is to grow with the right ROA and the right, so that produces the right ROTCE, even though it's not a business that's typically taking the kind of risk.
Right.
Like the equity business, that people are going to pay 100 basis points of ROA generally for. So the team's done a good job of doing that. They brought the returns up, they brought the break-even point in the business. And the reason why I think market share comes, this business is hard. Every day we file 3 billion quotes around the world. Every day you have these systems, it takes about $700 -800 million of systems expenditure every year to drive the business. You're operating in 37 regulatory jurisdictions or 50-some regulators. You're posting quotes all over the world. You have activities going on. You have to manage the risk well.
The break-even point, what Jim and the team, and even going back to Tom and Jim, and now Soof, and these guys, they brought the break-even point down $1 billion a quarter through engineering, the back. That then means it's in, it used to i n a tough quarter, make a few hundred million dollars; now it makes a billion dollars a tough quarter, but and more than in a good quarter. So that, that is a tremendously different thing. It's hard to do that, and that's why when people say we're going to go into this business or expand this business, it's not just there that people hand it to you. It's hard to do, and the team's done a good job of doing it.
Got it. I think just one last one on the business, just around Bank of America, but there's a huge international presence, and I think Bernie talked about it during the investor day. Just talk to us where the investment dollars are going, either in markets that we are excited about or products that we're leaning into.
If you look across the international platform, we operate outside the United States in the, in the global banking business, including the transaction services business, investment banking business, the markets business. Those businesses are global. You have to work with the clients and the audience. We have to know if you're... Not these clients, because they're all financial service, but if you're covering, even if financial, if you're covering cars and you're not covering it on a global basis.
Good.
You really don't understand the car market. So whether it's research or whether it's, it's, corporate capital markets, in, in markets, and whether it's investment banking, covering the clients. So they've grown, very strong, I think, you know, 10%-15%, I think Bernie was showing in the statistics. It goes into all lines of business because it has to be operated on a global basis, global businesses. But Bernie does a great job of bringing them together and driving it. And where we've seen where we think there's opportunities for us, continues to be in Europe, always in Asia, because just the sheer formation and then, and the connectivity.
When we go to talk to clients, I think to be competitive, even in middle-market in the United States, you have to have a global business because think about the discussion going on now for a mid-sized company producing a supply chain on a global basis and getting products from all over the world, and how this is all going to work. So you know, our teammates in India spend time with our middle-market customers about how it's all going to work as India becomes a build-out for a backbone for the world and things like that.
That's unique. So it's. Bernie's done a good job of leading the team. All the business leaders drive it, and it's a very important business, so it's about 20-odd% of what we have. So the reason why it's hard to get, everybody says, you want it to be bigger. The answer is, I never look at it that way, because if you think about the consumer business being so big, it's a little harder to keep up with that. There's just so much opportunity for us in the consumer and wealth management business in the U.S. that it's sort of hard, the rest of the world is not as big as people think, so it's hard to keep up with that. But that's, that doesn't mean they're not growing. They're doing a great job.
Got it. I guess maybe pivoting to expenses, you talked about headcount a few times. I appreciate, I, I think the bank did not provide an expense target for the year, but I think there's a huge commitment to operating leverage. Just talk to us in terms of what gives you confidence in the level of operating leverage, what the levers are? As you earlier said, like, you wouldn't say that if you didn't believe it. So w hat drives that confidence?
So start with what we said was 200-300 basis points operating leverage. We said 5%-7% NII growth and all that's setting up, and a lot of that comes from, you know, a good chunk of it comes from the rollover the portfolios, and then another chunk comes from loan and deposit growth. So NII is critical to that because when you look at our efficiency ratio back when it was the lowest in the low to mid-50s, in 58, it was, you know, that's when NII was a little higher percentage of the revenue stuff.
So that's all there. So we feel good about it. But how do you, how do you drive this? We are applying technology all the time, so we're, each week, a million lines of code go in, each week we take out. There's a whole bunch of operational excellence projects around the company where we're taking heads out and then redeploying them. And so what that's enabled us to do is, from the summer of 25 till now, you know, before we hired the 2,000+ kids out of schools, we're flat headcount. So we engineered 2,000 jobs out in four months. You start to noodle on that. So that's what we're doing. And so you've seen the headcount at the end of January is 213,000, down about 300 from end of year.
You're always just driving it. We did no manager ads in January, which is good news. So how do we have confidence that headcount, you know, manage out by month? We know there's inflationary aspects. That's something we have to deal with. We've grown our expenses under the rate of inflation for the last six years. So, yet in the revenue, especially in the fee-based business, have grown twice the rate of inflation. So, that, and that's more costly. So we're pretty confident. But we do, we measure it, we manage the hell out of it. We look at everybody. We're very tough on hiring because in the end of the day, we have the option each month not to hire 1,000+ people.
So all we have to do is say, "Don't hire, we could drop that." So all the hiring and the replacement jobs and stuff like that is carefully engineered, and then we look and say, where can we redeploy that headcount capacity more productive? So it's something we've been doing over and over and over again. The impact of the COVID and inflation pushed up the dollars per person paid, but the headcount being flat allows you to mitigate that back out. If you look from 2024 to 2025, the revenue from the fee-based businesses were all up high single or double digit, and the actual expense base was about the same as it was the years before, when they were growing at about half that rate.
And just on that one, Brian, every bank does things differently. If you're a shareholder of Bank of America, the expense control in a world where it's competitive, the need for technology investments, like, how would you refute the argument that this is not coming at the expense of investing in the business?
Well, we'll spend 10% more on technology development this year, that... I mean, 2026 than we did in 2025. We'll put several hundred million of that AI as part of that. That didn't come from nowhere. We'll build out the branches. It's, you know, it's all in the run rate. We've been building those branches out while we're taking them down. The head, the branch count, I think fourth quarter to fourth quarter was down 100 or something like that. Net, they're more costly coming in because they're bigger, and, you know, built in a modern environment or the rental expense is higher, we're absorbing that. So it's just look at what we've done year after year after year, and it's because we've basically sat there and focused on the head count. So then the question is, we are investing.
New branches, technology development, more revenue-generating employees and, you know, we're up. We added 50, 70 private bankers over the last 12-18 months. We've added commercial bankers. We effectively added 1,000 people in business banking, which is $0-$50 million, by consolidating people out of the branches into it. And then Sharon and team are actually shaping that down a bit because it was, but that gave us a 30%-40% increase in the sales force. But people who are already at Bank of America are already being paid, we just moved them to a place they could have more effectiveness and then more automated small business practice branches.
So it's just the investment is there and has been, you know, in the market share. You can see it. It continues to push up and whether it's commercial banking or consumer banking or markets. And you just—it's just, but it's very—I believe strongly that we've got to invest in the businesses because we got to have the growth. I also believe strongly you can do that by reengineering a lot of cost out. It's not zero. That's for why we're able to get it out to be net zero, or below zero.
Now it's gonna be, you know, a couple hundred basis points, net for the inflation minus the takeout. But we've done it over and over again, and we watch it like a hawk. But I also, I'm very, we've put a lot more in the brand, you know, and that's pushed our brand scores up the highest they've ever been, and consistently, month after month after month, and pushed through our competitors. We've looked at it. We put a lot more in the, in the physical plant around the world and, and stuff. So it's not for the faint of heart, but you can do it if you just are careful, but you have to invest to grow.
Look at our revenue growth and loan growth and deposit growth and things like that. But you have to be able to do it efficiently because we're in a big commodity business. There, you're going to have, what you said, 100-some corporates here. There's 4,000 competitors in consumer banking in the United States. It's not, and plus, the non-bank competitors. It's not like you're sitting out there saying, "Oh, we're a consolidated industry," or anything like that.
Right. I can assure you the bank's research team is extremely productive feel good about that. But, just very quickly, I know we have a few minutes left. One, so wanted to hit upon three things. One, the role of AI . Is this different from anything that we've seen in terms of what this could do in terms of productivity for Bank of America, for the industry, or is it a continuation of just how technology has shaped the industry?
It's both. Because it, it is something different, but is a continuation of the paradigm of, of digitization, machine learning, and now this. The thing is different. So we showed a chart at the Investor Day that showed. We started, you know, the management team started in 2010, 285,000 people. We got up to 305,000 people. We're down to 213,000 people. But if you looked at what happened for the first big chunk of that time, basically 50,000 people came out of the consumer business writ large, and about 25,000 people came out of operations, and a net head count reduction of say, 85,000-90,000. So start to think about that question: What happened to the rest of it?
Well, we built out in revenue-producing areas, and there weren't a lot of ability to, as the regulatory onslaught came, you know, we went from, say, 2,500, 3,000 people in risk, to 7,000, 8,000 people in risk and finance, et cetera. So what AI does is give you a chance to work on areas you heretofore haven't had that much of a chance to work on. So in supplying the, you know, the 10 million cells we supply every day for the liquidity report that goes to the Fed, you know, that's extremely capable of using AI to help you do and save money. In the audit team, which is 1,400 people, up from, you know, probably 600-700 pre-financial crisis, and you know, now we can engineer the head count back down. So it allows you to attack places.
Now, how do we know that? If you looked at the Investor Day, we also talked about the ability to that AI has deployed. So, you know, a decade ago now, we were trying to put the search engine into our mobile banking, and we couldn't get it to work, the generally available search engine. So we said: "We need a model that can say, customer says X, this is what they really mean. Let's go, let's go do that for them." Today, we call it a small language model. Nobody would know what we were talking about back then, and nobody did because we had to go and have somebody build it for us special. They built a thing which we end up calling Erica.
Erica today has, you know, 20 million people using 150-200 million times a quarter. 200 intents, originally being 200 questions it could answer accurately, now 700. And so, and we think it's 11,000 FTE equivalents that go through that system on a daily basis. So this isn't theoretical. Then we took Erica from that, and we put it into the break/fix. So when Abraham screws up his laptop and can't get it fixed, it used to be he clicked on it, he'd get—he'd go call an 800 number, and somebody talking through it. Now, he clicks on a little dot, and he's interfacing to a bot, and that bot is actually powered by the Erica engine because we know it works. And, you know, look, we'll use other models. We already do use other models, but that's gone.
So it went there. Then Erica went into CashPro, and several hundred thousand medium-sized and larger businesses use it. Then, you know, so we took the same model across the platforms and used it. Then we brought other models in. And so in the markets business, we have a model that helps put out a, you know, daily report of what's going on in markets. We have models which help us in the drafting of pitch books. So this isn't theoretical, and that's why I say, but it's not- it's, it's not wholly different because we had models that did a lot of stuff before. It's just that the, you know, the capabilities are now reaching other places. So, and we know it works. But what did we also learn? Your data has to be perfect.
We spent, we've spent about $3 billion on data cleansing over the last decade. The answer has to be right, or the customers will go bonkers. The transmission mechanism has to be really robust. So at any given moment, you could be in a car 60 miles an hour going down the highway and, you know, hopefully not driving and doing this, but and get on your mobile banking and ask a question, Erica, and we have to hit 110 systems to get the answer right. So the pipe that transmits that, the pace at which it processes it, you can't have this latency. And by the way, you in the markets business, you know latency. So and, and so it's a lot more difficult than people think. So I think, yes, it's not, it is wholly different.
Yes, it's not totally different, but at the end of the day, it, what it takes is some infrastructure that I think people. If Block, Bill. com , he can just take this model and let it run. The first time it does something with a customer in our business, because of the relationship nature we have, you get the term paper wrong, your kid gets a term paper wrong in school, it's a bad day for him. We give a customer the wrong answer on something, it's not, it's not a bad day, it's a life-defining moment for them.
Right. Understood. Last question, I know we are over time, but when you think about capital deployment priorities, just talk to us what the those are, and as we get more clarity on regulations, do you expect buybacks to ramp up?
So I think we've we basically have been focused on returning all the capital on an incremental quarter. So we're and how do you think about that the other way around, the CET, CET1, the TCE, you know, stays about flattish, and we're trying to manage that. So we're basically taking all the earnings, paying the dividend, and then putting the rest back in the market, and we'll continue to do that.
And then with the growth of the company, you'll see the, you'll see the ratios come down towards the, the target ratios. Now, the question is how the math behind those ratio calculation goes. And so when we get that, then we'll be able to figure out what to do next. But right now, you've seen us drift from, I think, almost a 12% ratio. I remember down in the, I think, 11.30 or whatever it was last quarter. You'll see that drift down, so all the capital's going back to the shareholders, and not because we don't have good uses for it because we are funding everything that's going on at the same time. It's just that our capital efficiency and effectiveness, we're able to continue to engineer that pretty well.
Right. With that, thank you so much, Brian.
Thanks.