Bank of America Fourth Quarter 2006 Results

Transcription

1 Bank of America Fourth Quarter 2006 Results Ken Lewis Chairman, CEO and President Joe Price Chief Financial Officer January 23, 2007

2 Forward Looking Statements This presentation contains forward-looking statements, including statements about the financial conditions, results of operations and earnings outlook of Bank of America Corporation. The forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include, among others, the following: 1) projected business increases following process changes and other investments are lower than expected; 2) competitive pressure among financial services companies increases significantly; 3) general economic conditions are less favorable than expected; 4) political conditions including the threat of future terrorist activity and related actions by the United States abroad may adversely affect the company s businesses and economic conditions as a whole; 5) changes in the interest rate environment reduce interest margins and impact funding sources; 6) changes in foreign exchange rates increases exposure; 7) changes in market rates and prices may adversely impact the value of financial products; 8) legislation or regulatory environments, requirements or changes adversely affect the businesses in which the company is engaged; 9) changes in accounting standards, rules or interpretations, 10) litigation liabilities, including costs, expenses, settlements and judgments, may adversely affect the company or its businesses; 11) mergers and acquisitions and their integration into the company; and 12) decisions to downsize, sell or close units or otherwise change the business mix of any of the company. For further information regarding Bank of America Corporation, please read the Bank of America reports filed with the SEC and available at 2

3 Important Presentation Format Information Information included in the following slides is presented in a proforma format for the total corporation and the Global Consumer & Small Business Bank to include MBNA in all 2005 periods to provide a clearer picture of growth other than acquisitions. Information that is presented on a proforma basis is also reported on a GAAP basis in the Appendix Certain prior period amounts have been reclassified to conform to current period presentation 3

4 Summary Earnings Statement Annual Comparison Proforma 1 GAAP % Change 2005 Core net interest income (FTE) $ 34,164 $ 32,925 4 % $ 29,631 Market-based net interest income 1,651 1,938 1,938 Net interest income (FTE) 35,815 34,863 3 % 31,569 Noninterest income 38,432 32, % 25,354 Total revenue (FTE) 74,247 67, % 56,923 Provision for credit losses 5,010 5,082 (1 %) 4,014 Gains (losses) on sales of debt securities (443) 1,084 NM 1,084 Noninterest expense (excl merger charges) 34,792 34,411 1 % 28,269 Merger charge 805 1, Noninterest expense 35,597 35,590 28,681 Pre-tax income 33,197 27,922 25,312 Income tax expense 12,064 9,765 8,847 Net income 21,133 18, % 16,465 Merger & restructuring charges (after-tax) Net Income before merger charges $ 21,640 $ 18, % $ 16,740 Diluted EPS reported $ 4.59 $ 4.04 Merger charge impact Diluted EPS (excl. merger charge) Impact of intangibles amortization Proforma results include MBNA

5 2006 Highlights Earnings of $21.6 billion before merger charges, 14% increase over proforma 2005 Double digit revenue growth led by strong noninterest income and modest net interest income gains Focus on expense management produced strong operating leverage Global Consumer & Small Business earnings grew 19% over proforma 2005 Capital Markets & Advisory Services revenues rose 21% over 2005 Total consumer franchise unit sales climbed 7% over 2005 to 44.4 million Assets under management again reached new highs increasing to $542.9 billion Securities gains declined $1.5 billion from 2005 levels Credit quality remains stable Strong capital position 5

6 2006 Business Results 2006 REVENUE (FTE) EARNINGS Change vs. Proforma Change vs. Proforma Amt. % Change 2006 Amt. % Change Global Consumer & Small Business $ 41,691 $ 2,844 7 % $ 11,171 $ 1, % Global Corporate & Investment Bank 22,691 1, % 6, % Global Wealth & Investment Mgmt 7, % 2, % All Other 2,086 1,491 NM NM Total $ 74,247 $ 6, % $ 21,133 $ 2, % 6 1 Proforma results include MBNA

7 Achieving Growth in a Challenging Environment Proforma highlights on a managed basis Diluted EPS excluding merger and restructuring charges 2 Revenue growth (FTE) 5 % 7 % Net interest income (FTE) 1 % 1 % Noninterest income 12 % 16 % Expense growth: - 1 % $3.75 $4.11 $4.70 (excl. merger charges) Credit costs 12 % (16 %) Securities gains/(losses) (39 %) NM Achieved While Completing 2 of Industry s Largest Acquisitions 1 Managed basis treats securitized loan receivables as if they were still on the balance sheet and presents the earnings on the sold loan receivables as if they were not sold. Managed Noninterest Income includes the impact of the gains recognized on securitized loan principal receivables in accordance with SFAS No Excludes merger and restructuring charges of $.11, $.07 and $.11 in 2004, 2005 and 2006, respectively

8 Summary Earnings Statement 4th Quarter Comparisons Proforma 1 GAAP 4Q06 4Q05 % Change 4Q05 Core net interest income (FTE) $ 8,469 $ 8,484 - % $ 7,681 Market-based net interest income Net interest income (FTE) 8,955 8,905 1 % 8,102 Noninterest income 9,866 7, % 5,951 Total revenue (FTE) 18,821 16, % 14,053 Provision for credit losses 1,570 1,697 (7 %) 1,400 Gains (losses) on sales of debt securities NM 71 Noninterest expense (excl merger charges) 8,849 8,996 (2 %) 7,261 Merger charge Noninterest expense 9,093 9,058 7,320 Pre-tax income 8,179 5,894 5,404 Income tax expense 2,923 1,983 1,830 Net income 5,256 3, % 3,574 Merger & restructuring charges (after-tax) Net Income before merger charges $ 5,410 $ 3, % $ 3,614 Diluted EPS reported $ 1.16 $.88 Merger charge impact Diluted EPS (excl. merger charge) Impact of intangibles amortization Proforma results include MBNA

9 Summary Earnings Statement 4th Quarter Comparison 4Q06 3Q06 $ Change % Change Core net interest income (FTE) $ 8,469 $ 8,519 $ (50) (1 %) Market-based net interest income Net interest income (FTE) 8,955 8, % Noninterest income 9,866 10,067 (201) (2 %) Total revenue (FTE) 18,821 18,961 (140) (1 %) Provision for credit losses 1,570 1, % Gains (losses) on sales of debt securities 21 (469) 490 NM Noninterest expense (excl merger charges) 8,849 8, % Merger charge Noninterest expense 9,093 8,863 Pre-tax income 8,179 8,464 Income tax expense 2,923 3,048 Net income 5,256 5,416 (160) (3 %) Merger & restructuring charges (after-tax) Net Income before merger charges $ 5,410 $ 5,585 (175) (3 %) Diluted EPS reported $ 1.16 $ 1.18 Merger charge impact Diluted EPS (excl. merger charge) Impact of intangibles amortization

10 Net Interest Income Linked Quarter Net Interest Income & Yield 4Q06 3Q06 $ Change % Change Reported net interest income (FTE) $ 8,955 $ 8,894 $ 61 1 % Less: Market based NII Core net interest income (FTE) 8,469 8,519 (50) (1 %) Impact of securitizations 1,850 1, Core NII Managed Basis $10,319 $10,279 $ 40 - % Avg. earning assets $ 1,299,461 $1,302,366 $ (2,905) - % Market based earning assets 405, ,960 29,803 8 % Impact of securitizations 100,786 98,722 2,064 2 % Reported net interest yield 2.75 % 2.73 % 2 bps Core net interest yield 3.78 % 3.67 % 11 bps Managed net interest yield 4.14 % 4.00 % 14 bps Core net interest income (on a held basis) down slightly from 3Q06 Impact from sale of Brazilian operations - $110 mm Benefit of loan activity offset by continuing shift in deposit mix Market based net interest income increased as a result of higher customer related trading assets Core net interest yield benefited from prior quarter reduction in investment securities 10

11 Net Interest Income Managed Sensitivity Managed Net interest income impact for next 12 months Forward curve interest bp parallel shift $ (557) $ (171) bp parallel shift Flattening scenario from forward curve bp flattening on short end (687) (304) Steepening scenario from forward curve bp steepening on long end

12 Year 1 Bank of America NII Sensitivity on a Managed Basis First Rolling 12 Months December 31, 2006 As of DECEMBER 31, FF: Y: 6.19 NII : -1,083 Change in 1-mo Libor Curve Flatteners FF: Y: 4.78 FF: Y: 4.19 NII : -192 S FF: NII : 770 (H) (D) FF: Y: 5.19 FF: Y: 5.19 NII : (G) (J) (S) 10-Y: 5.19 NII : -269 FF: Y: 5.19 NII : 971 (F) (C) (I) NII : -557 FF: Y: 6.19 NII : 138 (B) NII : -989 FF: Y: 4.45 NII : 299 NII : 1,299 (E) (K) -200 Curve Steepeners FF: Y: 4.19 NII : 1, Change in 10-yr Swap

13 13 As of SEPTEMBER 30, 2006

14 Global Consumer & Small Business Banking (GCSB) Change from Proforma 4Q05 1 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 5,312 $ % $ 69 1 % Noninterest income 5, % % Total revenue (FTE) 10, % % Provision expense 1, % % Securities gains - 1 NM - - % Noninterest expense 4,873 (68) (1 %) % Pre-tax income 4, % (565) (12 %) Income tax expense 1, (203) Net income $ 2,527 $ % $(362) (13 %) ROE % 219 bps (215 bps) Efficiency ratio % (436 bps) 53 bps Net income up 16% over 4Q05 to $2.5 billion, but down 13% vs. 3Q06 Card services earnings increased 84% from 4Q05 Home equity earnings improved 12% from 4Q05 Product sales increased 13% over 4Q05 to 10.7 million E-commerce channel becoming increasingly important sales channel Credit costs continue to season and normalize 14 1 Proforma results include MBNA

15 Deposits (GCSB) Change from Proforma 4Q05 1 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 2,489 $ % $ 27 1 % Noninterest income 1, % (13) (1 %) Total revenue (FTE) 4, % 14 - % Provision expense % 5 10 % Noninterest expense 2, % 92 4 % Pre-tax income 1, % (83) (4 %) Income tax expense (27) Net income $ 1,244 $ (13) (1%) $ (56) (4 %) Debit purchase volume $ 45.1 b $ 5.5 b 14 % $ 2.3 b 5 % Net new retail checking accts 363 k Net new retail savings accts 82 k #1 deposit market share in US with largest branch and ATM network #1 debit market share with $169 billion in full year 2006 purchase volume #1 online banking presence with 21.3 million customers #1 online bill pay with 11.1 million customers paying $50.6 billion in bills in the quarter 15 1 Proforma results include MBNA

16 Deposits Business Metrics (GCSB) - Proforma Trend of deposit indicators: 4Q06 3Q06 4Q05 1 Average balances (in billions) Checking $123.5 $124.8 $125.9 Savings MMS CDs & IRAs Foreign & Other Total GCSB deposits GWIM and Business Banking deposits Total retail deposit balances $479.1 $477.9 $482.7 Deposit Spreads Checking 4.26 % 4.23 % 4.16 % Savings MMS CDs & IRAs Foreign & Other Total GCSB deposits Proforma results include MBNA 16 2 Retail deposit balances in business segments other than GCSB

17 Retail Deposits & MMMF Cumulative Growth January 2004 December 2006 Cumulative Balances Growth 40% 30% 20% 10% 0% -10% -20% Jan '04 Apr '04 Retail Money Market Mutual Funds Cumulative Balance Growth Jul '04 Oct '04 Jan '05 Apr '05 Jul '05 Oct '05 Jan '06 Apr '06 Jul '06 Oct ' % 7.5% Cumulative Balances Growth 20% 15% 10% 5% 0% Jan '04 Apr '04 Jul '04 Retail Deposits Cumulative Balance Growth Oct '04 Jan '05 Apr '05 Jul '05 Oct '05 Jan '06 Apr '06 Jul '06 Oct ' % 16.9% Industry BAC Cumulative Balances Growth 20% 15% 10% 5% 0% Jan '04 Combined Retail Deposits and Money Funds Cumulative Balance Growth Apr '04 Jul '04 Oct '04 Jan '05 Apr '05 Jul '05 Oct '05 Jan '06 Apr '06 Jul '06 Oct ' % 17.2% Executing on an enterprise-wide strategy that takes a broader view of the Deposits business which includes retail money market mutual funds On a combined basis since January 2004, growth in deposits has outperformed the industry by 0.7% Columbia Money Fund balance has grown $9B or 26% compared to a gain of 7.5% for the industry Bank of America has grown retail deposits by nearly $66B while maintaining firm price discipline recent growth trajectory has been steepening 17 Note: Columbia balances for Dec 03-Dec 04 assumed to grow at market rate. Sources: Fed H6

18 Card Services (GCSB) * Managed View Change from Proforma 4Q05 1 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $4,190 $ % $ 93 2 % Noninterest income 2,289 (2) - % % Total revenue (FTE) 6, % % Credit costs 2,608 (286) (10 %) % Noninterest expense 2,011 (356) (15 %) 55 3 % Pre-tax income 1, % (482) (21 %) Income tax expense (176) Net income $1,174 $ % $(306) (21 %) Purchase volume $ 69.2 b $ 2.3 b 3 % $ 2.0 b 3 % Total average loans b 12.5 b 7 % 4.4 b 2 % Card services net losses 2,218 (1,074) (33 %) % Losses as a % of loans 4.45 % (260 bps) 34 bps 30-day delinquency 5.16 % 120 bps 26 bps Risk adj. margin 8.55 % 217 bps (14 bps) #1 consumer credit card issuer in the US and the UK. * Card Services financials includes US consumer and business card, unsecured lending, international card operations and merchant services Proforma results include MBNA

19 Global Corporate & Investment Banking (GCIB) Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 2,624 $ (147) (5 %) $ (19) (1 %) Noninterest income 2, % (598) (18 %) Total revenue (FTE) 5, % (617) (10 %) Provision expense (108) (205) NM (130) NM Securities gains 19 (76) (80 %) 5 36 % Noninterest expense 3, % 80 3 % Pre-tax income 2, % (562) (18 %) Income tax expense (211) Net income $ 1,571 $ % $(351) (18 %) ROE % 334 bps (330 bps) Efficiency ratio % (343 bps) 711 bps Net income up 23% over 4Q05 to $1.6 billion, but down 18% vs. 3Q06 Revenue in 3Q06 included $720 mm gain from sale of Brazil operations 4Q06 includes $165 mm gain from sale of Asia Commercial Banking business Average loans are up 8% vs. 4Q05 to $247 billion Capital Markets & Advisory Services revenue increased 30% vs 4Q05 and up 7% vs. 3Q06 Asset quality remains stable 19

20 Business Lending (GCIB) Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $1,138 $ (56) (5 %) $ 13 1 % Noninterest income % (18) (7 %) Total revenue (FTE) 1,388 (27) (2 %) (5) - % Provision expense (85) (292) (141 %) (138) (260 %) Securities gains 5 5 NM 2 67 % Noninterest expense % 3 1 % Pre-tax income % % Income tax expense Net income $ 585 $ % $ % Risk mitigation $ (63) $ (27) (75 %) $ (27) (75 %) Average loans b 17.2 b 8 % 2.7 b 1 % #1 middle market lender with clients representing more than 1 out of 3 middle market companies within our franchise. Industry leading positions across Commercial Real Estate lending, Business Capital, Business Banking and Leasing Total GCIB client roster includes 98% of US Fortune 500 and 80% of global Fortune

21 Capital Markets and Advisory Services (GCIB) Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 486 $ % $ % Noninterest income 1, % 28 2 % Total revenue (FTE) 2, % % Provision expense 6 18 NM 9 NM Securities gains 10 (22) (69 %) 2 25 % Noninterest expense 1, % 9 1 % Pre-tax income % % Income tax expense Net income $ 385 $ % $ % 21 Investment banking fees $ 756 $ % $ % Debt u/w fees % % Equity u/w fees % % Advisory fees % % Sales & trading income 1, % (60) (5 %) Fixed income % (105) (10 %) Equity % % Avg trading related assets b 45.2 b 14 % 21.6 b 6 % S&T revenue volatility 12.1 (.1) (1 %) %

22 Treasury Services (GCIB) Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 970 $ 8 1 % $ (14) (1 %) Noninterest income % (21) (3 %) Total revenue (FTE) 1, % (35) (2 %) Provision expense ( 2) (2) NM (1) NM Noninterest expense % 9 1 % Pre-tax income % (43) (5 %) Income tax expense (15) Net income $ 544 $ 26 5 % $ (28) (5 %) Average deposits $ b $(2.9 b) (2 %) $ 5.1 b 4 % Deposit spread 2.54% 11 bps (10 bps) Voted Best Bank Cash & Working Capital Management North America and Best Bank Risk Management (Treasury Management International, 2006) Voted Best Bank for Payments and Collections in North America and Best Liquidity Management Bank in North America (Global Finance Magazine, 2006 and 2005) Voted Best for Industry Expertise and Knowledge and Best Personalized Client Service by Euromoney as part of the Customer Satisfaction section of the publication s Awards for Excellence

23 Global Wealth & Investment Management (GWIM) Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 971 $ (30) (3 %) $ 28 3 % Noninterest income 1, % % Total revenue (FTE) 1, % % Provision expense 2 1 NM 3 NM Noninterest expense 1, % 38 4 % Pre-tax income % 79 9 % Income tax expense Net income $ 602 $ (4) (1 %) $ 49 9 % ROE % 83 bps 112 bps Efficiency ratio % 171 bps (132 bps) Financial advisors 1, Client managers 2, Net income stable compared to 4Q05 and increased 9% over 3Q06 Assets under management increased 13% from 4Q05 and 5% over 3Q06 to $542.9 billion Average loans increased 14% on an annualized basis from 3Q06 Average deposits increased 18% on an annualized basis from 3Q06 $0 online equity trading program - early results proving successful 23

24 Columbia Management (GWIM) Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ (3) $ (1) (50 %) $ % Noninterest income % 32 8 % Total revenue (FTE) % % Noninterest expense % 23 9 % Pre-tax income % % Income tax expense Net income $ 92 $ % $ % Investment & brokerage $417 $ % $ % AUM b 72.2 b 20 % 22.6 b 6 % In a year-end ranking of firms, with more than 10 funds and $10 billion in AUM, our equity funds were top performers for the 1-year period ended 12/31/06 and placed 1st out of 52 firms, based on Morningstar percentile rankings. (1) On a 3-year AUM weighted basis, 88% of our equity funds were in the top 2 performance quartiles compared to the peer group. (2) Our Money Market Fund complex maintained a 6th place ranking among its Global peer group. (3) Money Market Fund s posted strong performance with 91% of the Fund s placing in the top 2 performance quartiles compared to their peer group. (3) 24

25 Global Wealth & Investment Management (GWIM) Assets Under Management Investment & Brokerage Service Fees $ in billions $ in millions $542.9 $500.1 $ $482.3 $493.9 $ $ $870 $ $ Q05 1Q06 2Q06 3Q06 4Q06 Equity Fixed Income Money Mkt/ Other 0 4Q05 1Q06 2Q06 3Q06 4Q06 Columbia Mgmt Private Bank Premier Banking Other % of AUM in 4 or 5 Star Funds 2 56% 56% 59% 61% 57% % of AUM in 1 st and 2nd quartiles 4 78% 82% 85% 88% 73% 25

26 Global Wealth & Investment Management (GWIM) Footnotes for Page 24 & 25 (1) Source: Columbia Management based on Morningstar data. Rankings include actively managed equity funds but exclude index and Fund of Funds. Share classes used may have limited eligibility and may not be available to all investors. (2) Results shown are defined by Columbia Management s calculation of its percentage of assets under management in the top two quartiles of categories based on Morningstar (Equity categories), Lipper ( Fixed Income categories) imoneynet (Money Market categories). The category percentile rank was calculated by ranking the three year gross return of share classes within the categories stated above. The assets of the number of funds within the top 2 quartile results were added and then divided by Columbia Managements total assets under management. Had fees been included, rankings would have been lower. Past performance is no guarantee of future results. The share class earning the ranking may have limited eligibility and may not be available to all investors. (3) The Money Market share class earning the ranking may have limited eligibility and may not be available to all investors. Money Market peer group rankings were provided by imoneynet. (4) Results shown are defined by Columbia Management s calculation using Morningstar s Overall Rating criteria for 4 & 5 star rating. The assets under management of the Columbia Funds that had a 4 & 5 star rating were totaled then divided by the assets under management of all the funds in the ranking by Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future results. 26

27 All Other Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 48 $ 61 NM $ (17) NM Noninterest income NM 188 NM Total revenue (FTE) NM 171 NM Provision expense (76) (87) NM (76) NM Securities gains 2 25 NM 485 NM Merger & restruct. exp NM (25) NM Noninterest expense (99) (160) NM (6) NM Pre-tax income NM 763 NM Income tax expense Net income $ 556 $619 NM $ 504 NM Components of equity investment gains: Principal investing $ 547 $ % $ (57) (9 %) Corporate & strategic NM 401 NM Total All Other equity gains 1, % % Other business segments % % Total corp equity gains $1,067 $ % $ % 27

28 Capital Strength 4Q06 3Q06 4Q05 Tier 1 Capital $ 91,065 $ 88,085 $ 74,375 Risk Weighted Assets 1,054,555 1,039, ,469 Tier 1 Capital Ratio 8.64 % 8.48 % 8.25 % Total Capital Ratio % % % Tier 1 Leverage Ratio 6.36 % 6.16 % 5.91 % Tangible Equity $ 60,188 $ 58,021 $ 52,985 Tangible Equity Ratio 4.35 % 4.22 % 4.26 % Tangible Equity Ratio Adj for OCI 4.86 % 4.69 % 4.82 % Months to required funding- Parent Co Earnings Returned to Shareholders Dividends paid $2,503 $2,536 $2,012 Cost of net share repurchases 2,538 2, Dividends & net repur. as % of earnings 96 % 85 % 82 % Dividend yield 4.20 % 4.18 % 4.33 % 28

29 Short-term Outlook Continuing flat yield curve environment Expect GDP growth around 3% Core net interest income growth in low single digits Reduced equity investment gains Credit costs continue to season and normalize Positive operating leverage 29

30 Long-term Targets Earnings Growth Global Consumer and Small Business Banking 6 9% Card Services 10%+ Deposits high single digit Consumer real estate businesses high single digit Global Corporate and Investment Banking 7 10% Business Lending steady mid single digits Treasury Services high single digits Capital Markets and Advisory Services is 10% plus but more market sensitive Global Wealth and Investment Management 7 10% Columbia Management low teens but more market sensitive Premier Banking and Investments high single digits Improved Private Banking 30

31 Summary Anticipating a soft landing for economy Expect continuing strength in consumer banking Effectively managing headwind of interest rate yield curve Leadership positions in key retail businesses provide strong base for growth Consumer credit losses continue to season and trend toward more normalized levels Commercial asset quality continues to be good Business lending profits continue to be hampered by macro conditions but Bank of America positioned well Continued investments in Global Corporate & Investment Banking and Premier Banking and Investments platforms working well Capital levels remain strong Remain committed to shareholder value 31

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33 33 APPENDIX

34 2006 Business Results - GAAP 2006 REVENUE (FTE) EARNINGS Change vs Change vs $ Amt. % Change 2006 $ Amt. % Change Global Consumer & Small Business $ 41,691 $ 13, % $ 11,171 $ 4, % Global Corporate & Investment Bank 22,691 2, % 6, % Global Wealth & Investment Mgmt 7, % 2, % All Other 2,086 1,402 NM NM Total $ 74,247 $ 17, % $ 21,133 $ 4, % 34

35 Global Consumer & Small Business Banking (GCSB) - GAAP Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 5,312 $ % $ 69 1 % Noninterest income 5,317 2, % % Total revenue (FTE) 10,629 3, % % Provision expense 1, % % Securities gains - 1 NM - - % Noninterest expense 4,873 1, % % Pre-tax income 4,004 1, % (565) (12 %) Income tax expense 1, (203) Net income $ 2,527 $ % $(362) (13 %) ROE % (578 bps) (215 bps) Efficiency ratio % 81 bps 53 bps 35

36 Deposits (GCSB) - GAAP Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $2,489 $ % $ 27 1 % Noninterest income 1, % (13) (1 %) Total revenue (FTE) 4, % 14 - % Provision expense % 5 10 % Noninterest expense 2, % 92 4 % Pre-tax income 1, % (83) (4 %) Income tax expense (27) Net income $1,244 $ 8 1 % $ (56) (4 %) Debit purchase volume $ 45.1 b $ 5.5 b 14 % $ 2.3 b 5 % Net new retail checking accts 363 k Net new retail savings accts 82 k 36

37 Deposits Business Metrics (GCSB) - GAAP Trend of deposit indicators: 4Q06 3Q06 4Q05 Average balances (in billions) Checking $ $ $ Savings MMS CDs & IRAs Foreign & Other Total GCSB deposits $ $ $ Deposit Spreads Checking 4.26 % 4.23 % 4.16 % Savings MMS CDs & IRAs Foreign & Other Total GCSB deposits

38 Card Services (GCSB) * Managed View Change from 4Q05 GAAP 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 4,190 $2, % $ 93 2 % Noninterest income 2,289 1, % % Total revenue (FTE) 6,479 4, % % Credit costs 2,608 1, % % Noninterest expense 2,011 1, % 55 3 % Pre-tax income 1,860 1, % (482) (21 %) Income tax expense (176) Net income $ 1,174 $ % $(306) (21 %) #1 consumer credit card issuer in the US and the UK. Purchase volume $ 69.2 b $ 3.6 b 6 % $ 2.0 b 3 % Total average loans b b 217 % 4.4 b 2 % Card services net losses 2, % % Losses as a % of loans 4.45 % (490 bps) 34 bps 30-day delinquency 5.16 % 103 bps 26 bps Risk adj. margin 8.55 % 321 bps (14 bps) * Card Services financials includes US consumer and business card, unsecured lending, international card operations and merchant services. 38

39 Card Services (GCSB) * Held View Change from Proforma 4Q05 1 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 2,269 $ % $ 45 2 % Noninterest income 3, % 81 3 % Total revenue (FTE) 5, % % Provision expense 1, % % Noninterest expense 2,011 (356) (15 %) 55 3 % Pre-tax income 1, % (482) (21 %) Income tax expense (176) Net income $ 1,174 $ % $(306) (21 %) #1 consumer credit card issuer in the US and UK. Total average loans $ 98.0 b $ 4.8 b 5 % $2.0 b 2 % Card services net losses 1,195 (604) (34 %) % Losses as a % of loans 4.84 % (282 bps) 32 bps 39 * Card Services financials includes US consumer and business card, unsecured lending, international card operations and merchant services. 1 Proforma results include MBNA

40 Card Services (GCSB) * Held View (GAAP) Change from 4Q05 3Q06 4Q06 Amt. % Amt. % Net interest income (FTE) $ 2,269 $ % $ 45 2 % Noninterest income 3,187 2, % 81 3 % Total revenue (FTE) 5,456 3, % % Provision expense 1, % % Noninterest expense 2,011 1, % 55 3 % Pre-tax income 1,860 1, % (482) (21 %) Income tax expense (176) Net income $ 1,174 $ % $(306) (21 %) #1 consumer credit card issuer in the US and UK. Total average loans $ 98.0 b $ 38.5 b 65 % $ 2.0 b 2 % Card services net losses 1,195 (211) (15%) % Losses as a % of loans 4.84 % (454 bps) 32 bps * Card Services financials includes US consumer and business card, unsecured lending, international card operations and merchant services. 40

41