Bank of America’s Digital Sales up 22% as Mobile Users Surge

For Bank of America, the great digital shift is very much in evidence.

The company’s latest quarterly results showed that digital “sales” made through the company’s online channels were up 22% year over year and now account for 49% of that activity.

Along the way, the number of active mobile banking users was up more than 7% year on year, to 35.5 million individuals.

Total interactions with Erica, Bank of America’s virtual financial assistant, were 146 million in the most recent quarter, up from about 123 million a year ago. Erica users were 33.5 million in the fourth quarter, vs. 24.6 million last year.

And with some granularity into P2P volumes, through Zelle, there were 273 million transactions logged in the most recent quarter, up 25% from last year and volume in the 2022 4Q stood at $81 billion. The 178 million “sent” Zelle transactions outpaced the 115 million checks sent in the quarter by a wide margin.

Consumer Spending Still Healthy  

The company noted that combined credit/debit spend was up 5% through the same timeframe, to $223 billion. Within those gains, credit was up 6%, outpacing debit, which gained 5%.

Consumer credit card loans were $87 billion, gaining from the $82 billion seen in the third quarter.

But if there’s been one watchword through the banking sector, it’s been caution on macro pressures.

And to that end, similar to what had been seen with peer J.P. Morgan, BofA boosted its provision for credit losses, reserving $1.1 billion in the period, as management anticipates a mild recession.

Management said during the conference call with analysts that in the fourth quarter of 2022, the company added 195,000 net new checking accounts, bringing the total for the year to more than 1 million. As many as 92% of to the accounts are primary checking accounts of the household in the average opening balance, not the average balance, but the average opening balance of these new accounts is over $5,000, per commentary on the call.

Net charge-offs of $689 million increased $169 million from the third quarter. The increase was driven by both higher commercial and credit card losses.

CEO Brian Moynihan said during the conference call that “consumer deposit balances continue to show strong liquidity with the lower cohorts of our consumers continue to hold several multiples of balance that they have as a pandemic began. These balances are drifting down, but they still have plenty of cushion left. And while their spending remains healthy, we continue to see the pace of that year-over-year growth slow.” The bank’s consumers, he said, spent $4.2 trillion in the aggregate, up 10% from a year ago.

Asked on the call about delinquencies — where additional supplementals showed that 30-day delinquencies as a percentage of credit card loans stood at 1.6%, up from 1.2% last year — CFO Alastair Borthwick said, “We’re still well below where we were pre-pandemic, but that would tell you on the consumer side, it looks like it’s drifting just a little higher.”