Bank of America CFO points to AI in stronger quarterly efficiency
Alastair Borthwick said new AI tools are helping employees work faster as the bank reported higher profit and a lower efficiency ratio.
By Maya Lindqvist · Senior Technology Correspondent
3 min read
Bank of America said its second-quarter results showed stronger profits and improved efficiency as it continues to spend on artificial intelligence. Chief financial officer Alastair Borthwick tied part of that progress to AI tools now used across the company.
The bank reported revenue of about $31.6 billion, net income of $9.1 billion and earnings per share of $1.21 in its Tuesday earnings release. Bank of America also reported a 59% efficiency ratio and roughly 17% return on tangible common equity.
Borthwick said the figures show that technology spending is beginning to show up in operating performance. “New AI capabilities now allow more than 200,000 of our employees to work more effectively, and they’ve helped contribute to producing a 59% efficiency ratio, a roughly 360 basis point improvement from last year,” he said.
Bank of America’s efficiency ratio measures expenses as a share of revenue. Borthwick said a decline in that figure indicates the bank is producing more revenue for each dollar it spends. He said the ratio moved from 63% last year to 59% this year, which he described as progress toward the bank’s goals.
The results do not isolate AI’s impact from other factors, including revenue growth, expense control and interest-rate effects. Borthwick pointed instead to business-line performance and productivity gains as evidence that the bank’s AI program is contributing to broader operating leverage.
Consumer banking shows operating leverage
In consumer banking, Borthwick said revenue rose 5% while the unit kept managing costs. He said Holly O’Neill, president of consumer, retail and preferred banking, and her team delivered a fifth straight quarter of positive operating leverage.
According to Borthwick, the consumer business posted a 51% efficiency ratio, a 29% return on capital and 10% earnings growth. He said the unit added $3.3 billion to Bank of America’s bottom line while rolling out AI capabilities and continuing to invest in its financial center network.
One internal tool cited in the company’s AI effort is Erica for Employees, which supports staff in consumer service, branch support and operations. Borthwick said tools such as Erica help employees handle routine requests and find information faster, allowing staff to spend more time on more complex work.
Regional banking hires add to growth push
Borthwick also said the U.S. middle market remains a strategic priority for the bank. Bank of America announced senior regional investment banking hires on Monday, expanding a business it launched in 2016.
He said the regional investment banking business now has more than 200 bankers across 26 U.S. cities. The latest hires add senior bankers in Austin, Boston, Charlotte, Chicago, Detroit, Minneapolis, New York, San Francisco and West Palm Beach, according to the company.
Bank of America said the regional investment banking team reports to Neil Kell and Samardh Kumar, co-heads of regional investment banking, and works with global commercial banking, Merrill, the private bank and local market teams.
Borthwick’s comments frame Bank of America’s AI spending as part of a broader operating strategy: improve productivity, keep investing and use efficiency gains to support growth. Investors will have more evidence in coming quarters on whether the lower efficiency ratio can hold as the bank expands staffing in fee-generating businesses.
This story draws on original reporting from Fortune.