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Bank of America’s nine-month performance was solid, driven by impressive trading numbers and growth in net interest income (NII), while the investment banking (IB) business was decent. This time, the company’s performance is likely to have been robust. The Zacks Consensus Estimate for revenues of $27.32 billion suggests 7.8% year-over-year growth.
In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has been revised 1% lower to 95 cents. This indicates a 15.9% jump from the prior-year quarter, as higher NII and solid capital markets business are likely to have supported BAC’s bottom-line growth.
Estimate Revision Trend
Image Source: Zacks Investment Research
Bank of America has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 8.47%.
BAC’s Earnings Surprise History
Image Source: Zacks Investment Research
Factors Impacting Bank of America’s Q4 Performance
NII: In the fourth quarter, the Federal Reserve cut interest rates twice. This, along with a rate cut in September, lowered rates to the 3.50-3.75% range. This is likely to have hurt Bank of America’s NII. Yet, a solid lending scenario and stabilizing funding/deposit costs are expected to have offered much-needed support.
Per the Fed’s latest data, demand for commercial and industrial, real estate and consumer loans was robust in the first two months of the quarter. Hence, BAC is expected to have witnessed a decent rise in loan demand. Likewise, its peers, JPMorgan (JPM - Free Report) and Citigroup (C - Free Report) , are likely to have recorded a modest loan demand.
BAC expects NII (fully tax equivalent) to be $15.6-$15.7 billion in the fourth quarter, suggesting 8% year-over-year growth. The Zacks Consensus Estimate for NII of $15.65 billion indicates a 7.8% year-over-year increase. Our estimate for NII is $15.61 billion.
IB Fees: Global mergers and acquisitions (M&As) in the fourth quarter of 2025 surged impressively from the lows of April and May that followed President Trump’s announcement of ‘Liberation Day’ tariff plans. The quarter saw a rise in M&A volume, driven by an easing of the buyer-seller valuation gap, lower capital costs and a focus on scale and AI integration. So, Bank of America’s advisory fees are likely to have recorded a decent improvement.
The quarter also saw significant IPO activity. Several factors, including moderating inflation, lower rates and the ongoing AI boom, drove the rise. Further, global bond issuance volume was solid. So, BAC’s underwriting fees (accounting for almost 40% of total IB fees) are expected to have increased during the to-be-reported quarter.
Management expects IB fees be “flattish to a little bit down from last year.” The Zacks Consensus Estimate for IB income of $1.62 billion indicates a decline of 2% from the prior-year quarter. We expect IB income to be $1.72 billion.
Trading Income: Client activity and market volatility were solid in the fourth quarter. Major factors that impacted trading business included the longest U.S. government shutdown in history, a dip in consumer sentiment, easing monetary policy and a dominant AI-theme. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Thus, BAC is likely to have recorded a solid performance in trading revenues this time.
Driven by heightened market volatility and a rise in client activity, the company projects revenues in the Global Markets segment to rise in the high-single digits or close to 10% on a year-over-year basis in the fourth quarter of 2025.
The Zacks Consensus Estimate for total sales and trading revenues of $5.06 billion suggests a 23.3% rise on a year-over-year basis. Our estimate for the metric is the same as the consensus estimate.
Expenses: While Bank of America managed expenses prudently in the past, expansion into new markets by opening financial centers and efforts to digitize operations and upgrade existing financial centers are expected to have kept non-interest expenses elevated in the to-be-reported quarter.
Management anticipates non-interest expenses to be nearly $17.3 billion for the fourth quarter, relatively stable sequentially. Our estimate for the metric is $17.4 billion, suggesting a 3.6% year-over-year increase.
Asset Quality: Bank of America is less likely to have set aside a massive amount of money for potential delinquent loans, as interest rates have come down from the highs of 5-5.25%. Our estimate for provision for credit losses is pegged at $1.33 billion.
The Zacks Consensus Estimate for non-performing loans (NPLs) of $6.37 billion implies a 6.6% increase from the prior-year quarter. Also, the consensus estimate for non-performing assets (NPAs) of $6.34 billion suggests a 3.6% rise. Our estimates for NPLs and NPAs are pegged at $5.88 billion and $6.25 billion, respectively.
What Our Model Reveals About BAC’s Q4 Earnings
Per our proven model, the chances of an earnings beat for BAC are low this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you can see below.
Bank of America has an Earnings ESP of -0.08%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
In the fourth quarter, BAC shares gained 6.6%, outperforming the S&P 500 Index. In the same time frame, shares of JPMorgan and Citigroup rallied 2.1% and 14.9%, respectively.
4Q25 BAC Price Performance
Image Source: Zacks Investment Research
JPMorgan is slated to announce results on Jan. 13, while Citigroup will report quarterly numbers on Jan. 14.
Let’s check out the value Bank of America offers investors at current levels. The stock is trading at a 12-month trailing price-to-tangible book (P/TB) of 2.01X. This is below the industry’s 3.18X. This shows that the stock is currently inexpensive.
Price-to-Tangible Book (TTM)
Image Source: Zacks Investment Research
Further, BAC stock is trading at a discount compared with JPMorgan, which has a P/TB of 3.23X. On the other hand, Citigroup has a P/TB of 1.27X, making it inexpensive compared with Bank of America.
How to Approach BAC Shares Before Q4 Earnings
The interest rate pressure that Bank of America has faced since 2023 has subsided to a great extent, and risks surrounding deposit outflows have abated. Also, the industry-wide lending scenario is expected to be strong, and the company is anticipated to gain from it.
The company’s aggressive branch expansion across the United States as part of a broader strategy to solidify customer relationships and tap into new markets will drive NII growth over time. This will also help capitalize on cross-selling opportunities. Further, it spends $13 billion annually on technology, of which almost $4 billion will be utilized for new technology initiatives.
While BAC is expected to be adversely impacted by Fed rate cuts, the NII growth pace is likely to slow down, an improving lending scenario will offset the pressure to some extent. The company expects NII growth of 6-7% for 2026.
Bank of America’s outlook remains constructive, but investors may want to avoid rushing to buy the stock. Instead, they should listen closely to management’s commentary on 2026 NII guidance and the IB outlook during the upcoming fourth-quarter earnings call. It’s also important to weigh broader macroeconomic trends and policy developments that could meaningfully influence the company’s performance trajectory.
Those who already have BAC stock in their portfolio can hold on to it because it is less likely to disappoint over the long term.
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Is Bank of America Stock Worth Owning Ahead of Q4 Earnings?
Key Takeaways
One of the biggest banks in the United States, Bank of America (BAC - Free Report) , is scheduled to announce fourth-quarter and full-year 2025 results on Jan. 14 before the opening bell.
Bank of America’s nine-month performance was solid, driven by impressive trading numbers and growth in net interest income (NII), while the investment banking (IB) business was decent. This time, the company’s performance is likely to have been robust. The Zacks Consensus Estimate for revenues of $27.32 billion suggests 7.8% year-over-year growth.
In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has been revised 1% lower to 95 cents. This indicates a 15.9% jump from the prior-year quarter, as higher NII and solid capital markets business are likely to have supported BAC’s bottom-line growth.
Estimate Revision Trend
Image Source: Zacks Investment Research
Bank of America has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 8.47%.
BAC’s Earnings Surprise History
Image Source: Zacks Investment Research
Factors Impacting Bank of America’s Q4 Performance
NII: In the fourth quarter, the Federal Reserve cut interest rates twice. This, along with a rate cut in September, lowered rates to the 3.50-3.75% range. This is likely to have hurt Bank of America’s NII. Yet, a solid lending scenario and stabilizing funding/deposit costs are expected to have offered much-needed support.
Per the Fed’s latest data, demand for commercial and industrial, real estate and consumer loans was robust in the first two months of the quarter. Hence, BAC is expected to have witnessed a decent rise in loan demand. Likewise, its peers, JPMorgan (JPM - Free Report) and Citigroup (C - Free Report) , are likely to have recorded a modest loan demand.
BAC expects NII (fully tax equivalent) to be $15.6-$15.7 billion in the fourth quarter, suggesting 8% year-over-year growth. The Zacks Consensus Estimate for NII of $15.65 billion indicates a 7.8% year-over-year increase. Our estimate for NII is $15.61 billion.
IB Fees: Global mergers and acquisitions (M&As) in the fourth quarter of 2025 surged impressively from the lows of April and May that followed President Trump’s announcement of ‘Liberation Day’ tariff plans. The quarter saw a rise in M&A volume, driven by an easing of the buyer-seller valuation gap, lower capital costs and a focus on scale and AI integration. So, Bank of America’s advisory fees are likely to have recorded a decent improvement.
The quarter also saw significant IPO activity. Several factors, including moderating inflation, lower rates and the ongoing AI boom, drove the rise. Further, global bond issuance volume was solid. So, BAC’s underwriting fees (accounting for almost 40% of total IB fees) are expected to have increased during the to-be-reported quarter.
Management expects IB fees be “flattish to a little bit down from last year.” The Zacks Consensus Estimate for IB income of $1.62 billion indicates a decline of 2% from the prior-year quarter. We expect IB income to be $1.72 billion.
Trading Income: Client activity and market volatility were solid in the fourth quarter. Major factors that impacted trading business included the longest U.S. government shutdown in history, a dip in consumer sentiment, easing monetary policy and a dominant AI-theme. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Thus, BAC is likely to have recorded a solid performance in trading revenues this time.
Driven by heightened market volatility and a rise in client activity, the company projects revenues in the Global Markets segment to rise in the high-single digits or close to 10% on a year-over-year basis in the fourth quarter of 2025.
The Zacks Consensus Estimate for total sales and trading revenues of $5.06 billion suggests a 23.3% rise on a year-over-year basis. Our estimate for the metric is the same as the consensus estimate.
Expenses: While Bank of America managed expenses prudently in the past, expansion into new markets by opening financial centers and efforts to digitize operations and upgrade existing financial centers are expected to have kept non-interest expenses elevated in the to-be-reported quarter.
Management anticipates non-interest expenses to be nearly $17.3 billion for the fourth quarter, relatively stable sequentially. Our estimate for the metric is $17.4 billion, suggesting a 3.6% year-over-year increase.
Asset Quality: Bank of America is less likely to have set aside a massive amount of money for potential delinquent loans, as interest rates have come down from the highs of 5-5.25%. Our estimate for provision for credit losses is pegged at $1.33 billion.
The Zacks Consensus Estimate for non-performing loans (NPLs) of $6.37 billion implies a 6.6% increase from the prior-year quarter. Also, the consensus estimate for non-performing assets (NPAs) of $6.34 billion suggests a 3.6% rise. Our estimates for NPLs and NPAs are pegged at $5.88 billion and $6.25 billion, respectively.
What Our Model Reveals About BAC’s Q4 Earnings
Per our proven model, the chances of an earnings beat for BAC are low this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you can see below.
Bank of America has an Earnings ESP of -0.08%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
It carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
BAC’s Price Performance & Valuation Analysis
In the fourth quarter, BAC shares gained 6.6%, outperforming the S&P 500 Index. In the same time frame, shares of JPMorgan and Citigroup rallied 2.1% and 14.9%, respectively.
4Q25 BAC Price Performance
Image Source: Zacks Investment Research
JPMorgan is slated to announce results on Jan. 13, while Citigroup will report quarterly numbers on Jan. 14.
Let’s check out the value Bank of America offers investors at current levels. The stock is trading at a 12-month trailing price-to-tangible book (P/TB) of 2.01X. This is below the industry’s 3.18X. This shows that the stock is currently inexpensive.
Price-to-Tangible Book (TTM)
Image Source: Zacks Investment Research
Further, BAC stock is trading at a discount compared with JPMorgan, which has a P/TB of 3.23X. On the other hand, Citigroup has a P/TB of 1.27X, making it inexpensive compared with Bank of America.
How to Approach BAC Shares Before Q4 Earnings
The interest rate pressure that Bank of America has faced since 2023 has subsided to a great extent, and risks surrounding deposit outflows have abated. Also, the industry-wide lending scenario is expected to be strong, and the company is anticipated to gain from it.
The company’s aggressive branch expansion across the United States as part of a broader strategy to solidify customer relationships and tap into new markets will drive NII growth over time. This will also help capitalize on cross-selling opportunities. Further, it spends $13 billion annually on technology, of which almost $4 billion will be utilized for new technology initiatives.
While BAC is expected to be adversely impacted by Fed rate cuts, the NII growth pace is likely to slow down, an improving lending scenario will offset the pressure to some extent. The company expects NII growth of 6-7% for 2026.
Bank of America’s outlook remains constructive, but investors may want to avoid rushing to buy the stock. Instead, they should listen closely to management’s commentary on 2026 NII guidance and the IB outlook during the upcoming fourth-quarter earnings call. It’s also important to weigh broader macroeconomic trends and policy developments that could meaningfully influence the company’s performance trajectory.
Those who already have BAC stock in their portfolio can hold on to it because it is less likely to disappoint over the long term.