Whilethe lower for longer rate environment presents a headwind to profitability,Bank of America Corp.believes it can grow earnings by keeping net interest income stable whiletargeting further expense reductions over the next six quarters.

Earlyon July 18, BofA reported that second-quarter net income applicable tocommon shareholders declined to $3.87 billion, or 36 cents per share, from $4.80billion, or 43 cents per share, in the year-ago period.

BofAChairman and CEO Brian Moynihan said on a conference call to discusssecond-quarter results that the company believes it "surely can" growearnings even if interest rates remain low by keeping net interest income andfees stable to growing, while further reducing its expense base.

Inthe second quarter, BofA reported that net interest income totaled $9.21 billion,up slightly from $9.17 billion in the prior period, but down from $10.46billion one year ago. Noninterest expense declined to $13.49 billion in thesecond quarter from $14.82 billion in the linked quarter and $13.96 billion ayear earlier. Moynihan said BofA's expenses reached a level in the secondquarter not seen since 2008.

Overthe last four quarters, BofA's expenses total around $56 billion, but thecompany expects to reduce the annualized amount to $53 billion over the nextsix quarters.

Analystson the conference call pressed BofA executives for further details on theplanned expense reductions and asked why the company felt the need to provideexpenses targets for 2018.

Moynihansaid the company decided to provide the Street with its expense targets becauseit felt like the analyst community has not fully appreciated its efforts toreduce costs and needs to update their estimates. He further noted that BofA'swork to simplify core processes and increase digital customers will help thecompany reduce expenses further.

BofACFO Paul Donofrio added that more customers are increasingly adopting digitalbanking. When customers make deposits through digital channels, the transactionis 90% cheaper for BofA, he said. BofA's active mobile users grew to 20.2million in the second quarter from 19.6 million in the prior quarter and 17.6million a year earlier.