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BAC's Q4 Earnings Top as Trading & NII Shine, Stock Slides on Weak IB
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Key Takeaways
BAC's Q4 earnings rose 18% to $0.98 per share, beating the consensus estimate of $0.95.
Trading revenue grew 10% year over year, with equity trading income up 23% in Q4.
Net interest income rose 10% to $15.92B, driven by higher interest income and loan balances.
Bank of America’s (BAC - Free Report) fourth-quarter 2025 earnings of 98 cents per share surpassed the Zacks Consensus Estimate of 95 cents. The bottom line also grew 18% year over year.
BAC shares lost more than 2% in pre-market trading in response to weak investment banking (IB) performance.
Behind BAC’s Q4 Headline Numbers
Bank of America recorded an improvement in trading numbers for the 15th straight quarter. Sales and trading revenues, excluding net DVA, grew 10% year over year to $4.53 billion. Fixed-income trading fees increased 1%, while equity trading income soared 23%.
BAC’s IB performance was subdued this time. IB fees (in the Global Banking division) of $973 million declined 1% year over year. Equity underwriting income plunged 26%, while debt underwriting income was relatively stable. Advisory revenues grew 5%.
Improvement in trading and advisory fees, along with higher net interest income (NII), drove Bank of America’s total revenues. NII rose on a year-over-year basis on higher interest income related to Global Markets activity, fixed-rate asset repricing and higher deposit and loan balances, partially offset by the impact of lower interest rates.
While provisions declined in the quarter on a year-over-year basis, non-interest expenses increased, which hurt the results to some extent.
The company’s net income applicable to common shareholders grew 12% from the prior-year quarter to $7.32 billion.
BAC’s Revenues Improve, Expenses Rise
Net revenues were $28.37 billion, which surpassed the Zacks Consensus Estimate of $27.49 billion. The top line was up 8% from the prior-year quarter.
NII (fully taxable-equivalent basis) grew 10% year over year to $15.92 billion. Net interest yield expanded 11 basis points (bps) to 2.08%.
Non-interest income rose 4% to $12.62 billion. This was driven by higher total fees and commissions and other income.
Non-interest expenses were $17.44 billion, up 4%. The rise was due increase in all cost components except professional fees.
The efficiency ratio was 61.11%, down from 63.04% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
Bank of America’s Credit Quality Improves
Provision for credit losses was $1.31 billion, down 10% from the prior-year quarter.
Net charge-offs declined 12% to $1.29 billion. As of Dec. 31, 2025, non-performing loans and leases as a percentage of total loans were 0.49%, down 6 bps from the prior-year period.
BAC’s Capital Position Strong
Book value per share as of Dec. 31, 2025, was $38.44 compared with $36.147 a year ago. Tangible book value per share was $28.73, up from $26.37 a year ago.
At the end of December 2025, the common equity tier 1 capital ratio (advanced approach) was 12.8% compared with 13.5% as of Dec. 31, 2024.
BAC’s Share Repurchase Update
In the reported quarter, the company repurchased shares worth $6.3 billion.
Our Take on Bank of America
Bank of America’s focus on digitizing and expanding operations, decent loan growth and stabilizing deposit/funding costs are likely to keep supporting growth. However, elevated expenses and a challenging operating backdrop pose major headwinds.
Bank of America Corporation Price, Consensus and EPS Surprise
Similar to BAC, solid trading performance and higher NII drove JPMorgan’s (JPM - Free Report) fourth-quarter 2025 adjusted earnings of $5.23 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $5.01.
JPM’s markets revenues exceeded management's expectations and grew 17% year over year. Further, the company recorded an increase in NII, driven by higher yields and 11% year-over-year jump in total loans. However, weak IB performance and higher operating expenses and provisions weighed on the results.
PNC Financial (PNC - Free Report) is slated to announce fourth-quarter and full-year 2025 results on Jan. 16.
Over the past seven days, the Zacks Consensus Estimate for PNC Financial’s quarterly earnings has been revised marginally upward to $4.23. This implies 12.2% growth from the prior-year quarter.
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BAC's Q4 Earnings Top as Trading & NII Shine, Stock Slides on Weak IB
Key Takeaways
Bank of America’s (BAC - Free Report) fourth-quarter 2025 earnings of 98 cents per share surpassed the Zacks Consensus Estimate of 95 cents. The bottom line also grew 18% year over year.
BAC shares lost more than 2% in pre-market trading in response to weak investment banking (IB) performance.
Behind BAC’s Q4 Headline Numbers
Bank of America recorded an improvement in trading numbers for the 15th straight quarter. Sales and trading revenues, excluding net DVA, grew 10% year over year to $4.53 billion. Fixed-income trading fees increased 1%, while equity trading income soared 23%.
BAC’s IB performance was subdued this time. IB fees (in the Global Banking division) of $973 million declined 1% year over year. Equity underwriting income plunged 26%, while debt underwriting income was relatively stable. Advisory revenues grew 5%.
Improvement in trading and advisory fees, along with higher net interest income (NII), drove Bank of America’s total revenues. NII rose on a year-over-year basis on higher interest income related to Global Markets activity, fixed-rate asset repricing and higher deposit and loan balances, partially offset by the impact of lower interest rates.
While provisions declined in the quarter on a year-over-year basis, non-interest expenses increased, which hurt the results to some extent.
The company’s net income applicable to common shareholders grew 12% from the prior-year quarter to $7.32 billion.
BAC’s Revenues Improve, Expenses Rise
Net revenues were $28.37 billion, which surpassed the Zacks Consensus Estimate of $27.49 billion. The top line was up 8% from the prior-year quarter.
NII (fully taxable-equivalent basis) grew 10% year over year to $15.92 billion. Net interest yield expanded 11 basis points (bps) to 2.08%.
Non-interest income rose 4% to $12.62 billion. This was driven by higher total fees and commissions and other income.
Non-interest expenses were $17.44 billion, up 4%. The rise was due increase in all cost components except professional fees.
The efficiency ratio was 61.11%, down from 63.04% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
Bank of America’s Credit Quality Improves
Provision for credit losses was $1.31 billion, down 10% from the prior-year quarter.
Net charge-offs declined 12% to $1.29 billion. As of Dec. 31, 2025, non-performing loans and leases as a percentage of total loans were 0.49%, down 6 bps from the prior-year period.
BAC’s Capital Position Strong
Book value per share as of Dec. 31, 2025, was $38.44 compared with $36.147 a year ago. Tangible book value per share was $28.73, up from $26.37 a year ago.
At the end of December 2025, the common equity tier 1 capital ratio (advanced approach) was 12.8% compared with 13.5% as of Dec. 31, 2024.
BAC’s Share Repurchase Update
In the reported quarter, the company repurchased shares worth $6.3 billion.
Our Take on Bank of America
Bank of America’s focus on digitizing and expanding operations, decent loan growth and stabilizing deposit/funding costs are likely to keep supporting growth. However, elevated expenses and a challenging operating backdrop pose major headwinds.
Bank of America Corporation Price, Consensus and EPS Surprise
Bank of America Corporation price-consensus-eps-surprise-chart | Bank of America Corporation Quote
Currently, BAC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Date of BAC’s Peers
Similar to BAC, solid trading performance and higher NII drove JPMorgan’s (JPM - Free Report) fourth-quarter 2025 adjusted earnings of $5.23 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $5.01.
JPM’s markets revenues exceeded management's expectations and grew 17% year over year. Further, the company recorded an increase in NII, driven by higher yields and 11% year-over-year jump in total loans. However, weak IB performance and higher operating expenses and provisions weighed on the results.
PNC Financial (PNC - Free Report) is slated to announce fourth-quarter and full-year 2025 results on Jan. 16.
Over the past seven days, the Zacks Consensus Estimate for PNC Financial’s quarterly earnings has been revised marginally upward to $4.23. This implies 12.2% growth from the prior-year quarter.