Bank of America saw noninterest expenses increase year over year as employee and technology costs increased during the first quarter of 2023. 

WHY IT MATTERS: The $3.1 trillion bank’s noninterest expenses rose 6% YoY to $16.2 billion, “driven by seasonal elevation from payroll taxes, FDIC insurance expense and the cost of adding people,” Bank of America Chief Executive Brian Moynihan said during today’s earnings call.

Bank of America added 3,000 employees in January, Chief Financial Officer Alastair Borthwick said during the call. However, the bank reduced its headcount to 216,000 at the end of Q1 from 218,000 in January. The bank plans to continue reducing headcount by another 3,000 employees by summer, he added.  

The Q1 cuts follow a small hiring spree the bank executed in Q4 2022, when the bank hired 3,600 employees, he said. 

BY THE NUMBERS: Bank of America reported for Q1: 

• Total revenue increased 13% YoY to $26.3 billion; 
• Net income rose by 15% YoY to $8.2 billion; 
• Digital adoption increased 3% YoY to 56 million; 
• Digital logins grew 13% YoY to 3.1 billion; and 
• AI assistant Erica’s usership rose 25% YoY to 17.8 million users. 

NOTEWORTHY: Bank of America began using AI assistant Erica internally, helping employees get more work done and making data more accessible and easier to view, Moynihan said during the call. 

“We’ve taken Erica internally and applied it to help us do work, and we’ve seen and have those benefits. We think this has extreme benefits for our company in the computer coding areas,” he said.  

FLASHBACK: The increases in noninterest expenses align with the bank’s previously stated goal of spending $3.7 billion on technology development in 2023 to be used for patent development, company investment and software development, Moynihan said at the Bank of America Securities Financial Services Conference in February. 

FUTURE LOOK: The bank added 650 wealth advisers in the past year, and named two new leaders in Lindsay Hans and Eric Schimpf, who will lead Merrill Wealth Management as presidents and co-heads, reporting directly to Moynihan. 

The bank plans to “continue investments in the [Wealth Management] business as we continue to add financial advisers,” Moynihan said during the earnings call.  

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