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BAC vs. WFC: Which Bank Is the Better Bet Ahead of Q2 Earnings?
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Key Takeaways
Bank of America is benefiting from accelerating NII, a rebound in IB and trading, and digital expansion.
Wells Fargo is poised to benefit from the removal of the asset cap.
While WFC trades at a lower valuation, BAC offers a superior recent stock performance.
As the second-quarter 2026 earnings season approaches, investors are turning their attention to the banking sector, wherein resilient credit quality, evolving interest-rate expectations and improving capital markets activity are shaping the outlook. Among the large-cap banks, Bank of America (BAC - Free Report) and Wells Fargo (WFC - Free Report) stand out as two compelling investment candidates, each offering distinct strengths and catalysts.
BAC is leveraging its industry-leading deposit franchise, diversified revenue streams and growing net interest income (NII) to navigate the current operating environment. Wells Fargo, meanwhile, continues to benefit from disciplined expense management, balance sheet optimization and operational improvements following years of restructuring.
With both banks set to report earnings on July 14, investors face an important question: which among BAC and WFC offers the more compelling investment opportunity ahead of the release? A closer comparison of their fundamentals, growth catalysts, valuation and near-term outlook may help identify the better bet.
The Case for BAC
Being the second-largest bank in the United States, Bank of America is well-positioned for continued improvement in NII, supported by loan growth, fixed-rate asset repricing and stabilizing funding costs. From 2020 to 2025, the company’s NII saw a compound annual growth rate (CAGR) of 6.7%, with the momentum continuing in the first quarter of 2026. Management expects fully taxable-equivalent NII to increase in the upper end of 6-8% this year.
BAC’s investment banking (IB) business has shown a meaningful recovery after weak 2022 and 2023, when IB fees in the Global Banking segment declined 45.7% and 2.4%, respectively. The business rebounded in 2024 and 2025, with fees rising 31.4% and 8.4%, respectively. With global merger and acquisition activity improving and the company maintaining a healthy deal pipeline, BAC is expected to continue benefiting from solid growth in IB fees.
The company’s trading business has also improved since 2022. In the first quarter of 2026, sales and trading revenues, excluding net DVA, rose 12% year over year. Management expects trading revenues in the second quarter to increase 15% year over year, driven by higher client activity and market volatility. However, given the volatile nature of capital markets, trading revenues can fluctuate significantly and may create earnings variability even when overall performance remains favorable.
Bank of America continues to focus on organic growth by expanding both physical and digital presence. This strategy is aimed at strengthening customer relationships, entering new markets and supporting long-term NII growth. By 2027, the company plans to open more than 150 financial centers. At the same time, the increased adoption of digital tools such as Zelle and its AI-powered assistant Erica is helping BAC boost customer engagement and cross-sell products, including mortgages, auto loans and credit cards. The company's plan to launch a cross-border real-time payments solution is expected to support high-volume, low-value international payments.
The Case for WFC
Wells Fargo has been moving to expand across multiple business lines now that the Fed has lifted the asset cap that limited its growth since 2018. With this, the company can boost deposits, grow its loan portfolio and broaden its securities holdings, efforts that will help in an increase in NII, going forward. Management expects NII to be $50 billion in 2026, driven by balance-sheet growth, a favorable loan and deposit mix, and continued fixed-asset repricing.
Due to elevated funding costs, WFC’s revenues have witnessed a negative CAGR of 0.3% over the last six years (2019-2025). However, the trend reversed in the first quarter of 2026, when revenues rose 6.4% year over year, driven by a rise in NII and fee income. As the bank intends to expand fee-generating businesses like payment services, asset management and mortgage origination, its top-line mix is expected to improve in the quarters ahead.
Wells Fargo is adopting a more balanced approach to its operations. While the bank is reducing headcount and streamlining processes, it is investing in its branch network and digital upgrades. This will allow the bank to maintain a focus on cost management.
Wells Fargo has been taking a strategic approach to its branch network, reducing its total branches 1.5% year over year to 4,093 by the end of the first quarter of 2026. At the same time, it continues to invest and optimize its branch network to reduce costs. In 2025, the company refurbished approximately 700 branches, with more than half of its branch network now upgraded and the remaining branches expected to be completed over the next few years.
BAC & WFC: Price Performance, Valuation & Other Comparisons
Over the past six months, BAC shares have gained 4.5%, while shares of Wells Fargo have lost 11%. Hence, in terms of price performance, Bank of America has a clear edge over WFC.
6-Month Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Bank of America is currently trading at a 12-month forward price-to-earnings (P/E) of 12.45X. In contrast, Wells Fargo is trading at a 12-month forward P/E of 11.73X.
Therefore, WFC is currently trading at a discount compared with BAC.
P/E F12M
Image Source: Zacks Investment Research
Bank of America’s return on equity (ROE) of 11.49% is lower than WFC’s 13.28%. This reflects WFC’s relatively more efficient use of shareholder funds in generating profits.
ROE
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for BAC & WFC?
The Zacks Consensus Estimate for BAC's 2026 and 2027 earnings indicates 17.9% and 14.3% year-over-year growth, respectively. In the past 30 days, earnings estimates for both years have been revised higher.
BAC Estimate Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for WFC’s 2026 and 2027 earnings indicates rallies of 11% and 12.9%, respectively. Earnings estimates for both years have been revised higher in the past 30 days.
WFC Estimate Revision Trend
Image Source: Zacks Investment Research
BAC or WFC: Which is the Better Investment Option Now?
Both Bank of America and Wells Fargo are well-positioned to benefit from an improving operating backdrop, marked by stabilizing funding costs, resilient credit quality and a gradual recovery in capital markets activity.
Wells Fargo’s post-asset-cap growth opportunity and attractive valuation make it an appealing long-term turnaround story. However, the bank is still in the process of rebuilding its revenue mix and expanding its balance sheet.
Bank of America, conversely, appears better-positioned heading into the second-quarter earnings release as it continues to benefit from one of the industry’s strongest deposit franchises, accelerating NII growth, a sustained recovery in IB, solid trading momentum and ongoing digital initiatives. These strengths are complemented by stronger expected earnings growth for both 2026 and 2027, upward estimate revisions, and a better recent stock performance.
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BAC vs. WFC: Which Bank Is the Better Bet Ahead of Q2 Earnings?
Key Takeaways
As the second-quarter 2026 earnings season approaches, investors are turning their attention to the banking sector, wherein resilient credit quality, evolving interest-rate expectations and improving capital markets activity are shaping the outlook. Among the large-cap banks, Bank of America (BAC - Free Report) and Wells Fargo (WFC - Free Report) stand out as two compelling investment candidates, each offering distinct strengths and catalysts.
BAC is leveraging its industry-leading deposit franchise, diversified revenue streams and growing net interest income (NII) to navigate the current operating environment. Wells Fargo, meanwhile, continues to benefit from disciplined expense management, balance sheet optimization and operational improvements following years of restructuring.
With both banks set to report earnings on July 14, investors face an important question: which among BAC and WFC offers the more compelling investment opportunity ahead of the release? A closer comparison of their fundamentals, growth catalysts, valuation and near-term outlook may help identify the better bet.
The Case for BAC
Being the second-largest bank in the United States, Bank of America is well-positioned for continued improvement in NII, supported by loan growth, fixed-rate asset repricing and stabilizing funding costs. From 2020 to 2025, the company’s NII saw a compound annual growth rate (CAGR) of 6.7%, with the momentum continuing in the first quarter of 2026. Management expects fully taxable-equivalent NII to increase in the upper end of 6-8% this year.
BAC’s investment banking (IB) business has shown a meaningful recovery after weak 2022 and 2023, when IB fees in the Global Banking segment declined 45.7% and 2.4%, respectively. The business rebounded in 2024 and 2025, with fees rising 31.4% and 8.4%, respectively. With global merger and acquisition activity improving and the company maintaining a healthy deal pipeline, BAC is expected to continue benefiting from solid growth in IB fees.
The company’s trading business has also improved since 2022. In the first quarter of 2026, sales and trading revenues, excluding net DVA, rose 12% year over year. Management expects trading revenues in the second quarter to increase 15% year over year, driven by higher client activity and market volatility. However, given the volatile nature of capital markets, trading revenues can fluctuate significantly and may create earnings variability even when overall performance remains favorable.
Bank of America continues to focus on organic growth by expanding both physical and digital presence. This strategy is aimed at strengthening customer relationships, entering new markets and supporting long-term NII growth. By 2027, the company plans to open more than 150 financial centers. At the same time, the increased adoption of digital tools such as Zelle and its AI-powered assistant Erica is helping BAC boost customer engagement and cross-sell products, including mortgages, auto loans and credit cards. The company's plan to launch a cross-border real-time payments solution is expected to support high-volume, low-value international payments.
The Case for WFC
Wells Fargo has been moving to expand across multiple business lines now that the Fed has lifted the asset cap that limited its growth since 2018. With this, the company can boost deposits, grow its loan portfolio and broaden its securities holdings, efforts that will help in an increase in NII, going forward. Management expects NII to be $50 billion in 2026, driven by balance-sheet growth, a favorable loan and deposit mix, and continued fixed-asset repricing.
Due to elevated funding costs, WFC’s revenues have witnessed a negative CAGR of 0.3% over the last six years (2019-2025). However, the trend reversed in the first quarter of 2026, when revenues rose 6.4% year over year, driven by a rise in NII and fee income. As the bank intends to expand fee-generating businesses like payment services, asset management and mortgage origination, its top-line mix is expected to improve in the quarters ahead.
Wells Fargo is adopting a more balanced approach to its operations. While the bank is reducing headcount and streamlining processes, it is investing in its branch network and digital upgrades. This will allow the bank to maintain a focus on cost management.
Wells Fargo has been taking a strategic approach to its branch network, reducing its total branches 1.5% year over year to 4,093 by the end of the first quarter of 2026. At the same time, it continues to invest and optimize its branch network to reduce costs. In 2025, the company refurbished approximately 700 branches, with more than half of its branch network now upgraded and the remaining branches expected to be completed over the next few years.
BAC & WFC: Price Performance, Valuation & Other Comparisons
Over the past six months, BAC shares have gained 4.5%, while shares of Wells Fargo have lost 11%. Hence, in terms of price performance, Bank of America has a clear edge over WFC.
6-Month Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Bank of America is currently trading at a 12-month forward price-to-earnings (P/E) of 12.45X. In contrast, Wells Fargo is trading at a 12-month forward P/E of 11.73X.
Therefore, WFC is currently trading at a discount compared with BAC.
P/E F12M
Image Source: Zacks Investment Research
Bank of America’s return on equity (ROE) of 11.49% is lower than WFC’s 13.28%. This reflects WFC’s relatively more efficient use of shareholder funds in generating profits.
ROE
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for BAC & WFC?
The Zacks Consensus Estimate for BAC's 2026 and 2027 earnings indicates 17.9% and 14.3% year-over-year growth, respectively. In the past 30 days, earnings estimates for both years have been revised higher.
BAC Estimate Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for WFC’s 2026 and 2027 earnings indicates rallies of 11% and 12.9%, respectively. Earnings estimates for both years have been revised higher in the past 30 days.
WFC Estimate Revision Trend
Image Source: Zacks Investment Research
BAC or WFC: Which is the Better Investment Option Now?
Both Bank of America and Wells Fargo are well-positioned to benefit from an improving operating backdrop, marked by stabilizing funding costs, resilient credit quality and a gradual recovery in capital markets activity.
Wells Fargo’s post-asset-cap growth opportunity and attractive valuation make it an appealing long-term turnaround story. However, the bank is still in the process of rebuilding its revenue mix and expanding its balance sheet.
Bank of America, conversely, appears better-positioned heading into the second-quarter earnings release as it continues to benefit from one of the industry’s strongest deposit franchises, accelerating NII growth, a sustained recovery in IB, solid trading momentum and ongoing digital initiatives. These strengths are complemented by stronger expected earnings growth for both 2026 and 2027, upward estimate revisions, and a better recent stock performance.
Currently, both WFC and BAC carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.