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The company began 2026 on a positive note, with robust trading and investment banking (IB) performance driving first-half results. BAC’s upcoming quarterly results are also expected to be solid, supported by a higher-for-longer interest rate environment and rising Treasury yields despite persistent inflationary pressures, volatile oil prices and geopolitical uncertainties. The Zacks Consensus Estimate for the company’s third-quarter revenues is pegged at $30.62 billion, indicating 9% year-over-year growth.
In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has been revised lower to $1.12. However, the figure suggests a 5.7% rise from the prior-year quarter’s actual.
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 the trailing four quarters, the average beat being 8.2%.
Earnings Surprise History
Image Source: Zacks Investment Research
Key Drivers of Bank of America’s Q3 Performance
NII: The Federal Reserve raised interest rates by 25 basis points (bps) in September after more than three years, with benchmark rates now around 3.75-4.00%. Though this is less likely to have affected BAC’s NII and margin numbers much in the third quarter, steady loan demand and decent economic growth are expected to have supported the metrics.
After robust lending activity in the first half of 2026, the momentum is likely to have normalized in the to-be-reported quarter. Per the Fed’s latest data, demand for commercial and industrial loans and consumer loans was decent in the first two months of the quarter, while real estate loan demand was healthy.
Thus, decent loan demand, coupled with stabilizing deposit and funding costs, is expected to have provided meaningful support to BAC’s NII. The Zacks Consensus Estimate for the company’s third-quarter tax-equivalent NII is $16.55 billion, indicating a 7.5% increase from the year-ago quarter’s actual.
IB Fees: After a record-setting first half, global mergers and acquisitions (M&A) activity slowed considerably in the third quarter as elevated interest rates and persistent inflation weighed on deal valuations and negotiations. Nevertheless, strategic buyers continued to pursue acquisitions to strengthen their market positions, achieve economies of scale and improve supply-chain resilience. A strong U.S. dollar also encouraged American companies to explore acquisition opportunities in Europe, while relatively favorable U.S. growth prospects attracted interest from foreign investors.
Despite these developments, overall global M&A activity remained subdued, with a few large transactions accounting for a significant portion of deal value. This is likely to have limited growth in Bank of America’s advisory fees during the quarter.
Meanwhile, initial public offering (IPO) activity remained relatively healthy, with proceeds reaching a five-year high, supported by major listings in the artificial intelligence (AI) and technology sectors. However, the number of IPOs declined year over year. Additionally, global equity and debt issuance activity moderated following a strong first half, as geopolitical uncertainties, inflationary pressures and fluctuating energy prices dampened investor sentiment.
Given these trends, BAC’s underwriting fees, which account for nearly 40% of its total IB fees, are expected to have received some support from healthy IPO proceeds. However, softer equity and debt issuance activity, along with subdued M&A volumes, is likely to have weighed on overall IB fee performance.
Reflecting these challenges, the Zacks Consensus Estimate for BAC’s third-quarter IB income is pegged at $1.71 billion, indicating a 15.3% decline from the prior-year quarter’s reported figure.
Trading Income: Client activity and market volatility were strong in the third quarter. Trading conditions were influenced by shifting expectations around AI, persistent geopolitical tensions, lingering inflation concerns and a hawkish stance from the Fed. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Thus, BAC is likely to have recorded a strong trading performance this time as well.
The Zacks Consensus Estimate for market making and similar activities of $3.33 billion for the to-be-reported quarter suggests a 3.9% rise on a year-over-year basis. Management anticipates third-quarter 2026 sales and trading revenues to be relatively flat.
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. The company expects third-quarter 2026 expenses of $18.6 billion.
Asset Quality: Bank of America is expected to have stepped up reserve building in the third quarter, reflecting heightened credit risks stemming from the Middle East conflict, volatile oil prices, persistent inflation and elevated interest rates. Consequently, the company’s provisions for credit losses are likely to have increased in the to-be-reported quarter.
The Zacks Consensus Estimate for non-performing loans and leases of $6.46 billion implies a 20.8% increase from the prior-year quarter.
What Our Model Reveals About BAC’s Q3 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, which is not the case here, as you can see below.
Bank of America has an Earnings ESP of -0.24%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
In the third quarter, BAC shares lost 6.7%, underperforming the industry. In the same time frame, shares of two of its close peers JPMorgan (JPM - Free Report) and Morgan Stanley (MS - Free Report) lost 1% and 11.2%, respectively.
3Q26 Price Performance
Image Source: Zacks Investment Research
JPMorgan is slated to announce third-quarter 2026 results on Oct. 13, while Morgan Stanley will announce quarterly numbers on the same day as BAC.
Let us check out the value Bank of America offers investors at current levels. The BAC stock is trading at a 12-month trailing price-to-tangible book (P/TB) of 1.89X. This is below the industry’s 3.02X. This shows that the stock is relatively inexpensive.
Price-to-Tangible Book (TTM)
Image Source: Zacks Investment Research
The BAC stock is trading at a discount compared with both JPMorgan and Morgan Stanley, which have P/TB ratios of 3.09X and 3.47X, respectively.
How to Approach BAC Shares Before Q3 Earnings?
Bank of America is well-positioned to continue to benefit from its vast scale, extensive capital markets operations and international footprint (which will drive significant fee income).
Management expects commercial loan growth in the mid to upper-single-digit range in the third quarter, with core commercial loan growth in the high-single-digit pace. Consumer loans are expected to grow in the low to mid-single-digit range in the quarter. Thus, supported by the expectation of loan growth in the second half of the year, along with robust deposit growth, fixed-rate asset repricing and balance-sheet optimization, BAC’s NII (FTE basis) is projected to grow in the upper end of 6-8% in 2026, roughly 7-8%.
BAC’s aggressive branch expansion across the United States as part of a broader strategy to solidify customer relationships and tap into new markets will further drive interest income growth over time. This will also help capitalize on cross-selling opportunities.
However, while Bank of America’s outlook remains constructive, investors may want to avoid rushing to buy the stock. Instead, they should closely watch management’s commentary on how geopolitical risk and market volatility affect the company’s performance, and the firm plans to navigate the current environment. Any revisions to BAC’s 2026 guidance for NII, IB, non-interest expenses and asset quality will be especially important, given the recent macro developments. Broader macroeconomic and policy trends that could materially shape the company’s performance trajectory should also be carefully considered.
Existing shareholders may hold the BAC stock, given its strong fundamentals and proven resilience. Potential investors should carefully weigh these factors and assess their risk tolerance before initiating positions.
View the Zacks #1 Rank List
Image: Bigstock
Should BAC Shares Be Added to Your Portfolio Ahead of Q3 Earnings?
Key Takeaways
Bank of America (BAC - Free Report) is scheduled to announce third-quarter 2026 results on Oct. 14, before the opening bell.
The company began 2026 on a positive note, with robust trading and investment banking (IB) performance driving first-half results. BAC’s upcoming quarterly results are also expected to be solid, supported by a higher-for-longer interest rate environment and rising Treasury yields despite persistent inflationary pressures, volatile oil prices and geopolitical uncertainties. The Zacks Consensus Estimate for the company’s third-quarter revenues is pegged at $30.62 billion, indicating 9% year-over-year growth.
In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has been revised lower to $1.12. However, the figure suggests a 5.7% rise from the prior-year quarter’s actual.
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 the trailing four quarters, the average beat being 8.2%.
Earnings Surprise History
Image Source: Zacks Investment Research
Key Drivers of Bank of America’s Q3 Performance
NII: The Federal Reserve raised interest rates by 25 basis points (bps) in September after more than three years, with benchmark rates now around 3.75-4.00%. Though this is less likely to have affected BAC’s NII and margin numbers much in the third quarter, steady loan demand and decent economic growth are expected to have supported the metrics.
After robust lending activity in the first half of 2026, the momentum is likely to have normalized in the to-be-reported quarter. Per the Fed’s latest data, demand for commercial and industrial loans and consumer loans was decent in the first two months of the quarter, while real estate loan demand was healthy.
Thus, decent loan demand, coupled with stabilizing deposit and funding costs, is expected to have provided meaningful support to BAC’s NII. The Zacks Consensus Estimate for the company’s third-quarter tax-equivalent NII is $16.55 billion, indicating a 7.5% increase from the year-ago quarter’s actual.
IB Fees: After a record-setting first half, global mergers and acquisitions (M&A) activity slowed considerably in the third quarter as elevated interest rates and persistent inflation weighed on deal valuations and negotiations. Nevertheless, strategic buyers continued to pursue acquisitions to strengthen their market positions, achieve economies of scale and improve supply-chain resilience. A strong U.S. dollar also encouraged American companies to explore acquisition opportunities in Europe, while relatively favorable U.S. growth prospects attracted interest from foreign investors.
Despite these developments, overall global M&A activity remained subdued, with a few large transactions accounting for a significant portion of deal value. This is likely to have limited growth in Bank of America’s advisory fees during the quarter.
Meanwhile, initial public offering (IPO) activity remained relatively healthy, with proceeds reaching a five-year high, supported by major listings in the artificial intelligence (AI) and technology sectors. However, the number of IPOs declined year over year. Additionally, global equity and debt issuance activity moderated following a strong first half, as geopolitical uncertainties, inflationary pressures and fluctuating energy prices dampened investor sentiment.
Given these trends, BAC’s underwriting fees, which account for nearly 40% of its total IB fees, are expected to have received some support from healthy IPO proceeds. However, softer equity and debt issuance activity, along with subdued M&A volumes, is likely to have weighed on overall IB fee performance.
Reflecting these challenges, the Zacks Consensus Estimate for BAC’s third-quarter IB income is pegged at $1.71 billion, indicating a 15.3% decline from the prior-year quarter’s reported figure.
Trading Income: Client activity and market volatility were strong in the third quarter. Trading conditions were influenced by shifting expectations around AI, persistent geopolitical tensions, lingering inflation concerns and a hawkish stance from the Fed. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Thus, BAC is likely to have recorded a strong trading performance this time as well.
The Zacks Consensus Estimate for market making and similar activities of $3.33 billion for the to-be-reported quarter suggests a 3.9% rise on a year-over-year basis. Management anticipates third-quarter 2026 sales and trading revenues to be relatively flat.
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. The company expects third-quarter 2026 expenses of $18.6 billion.
Asset Quality: Bank of America is expected to have stepped up reserve building in the third quarter, reflecting heightened credit risks stemming from the Middle East conflict, volatile oil prices, persistent inflation and elevated interest rates. Consequently, the company’s provisions for credit losses are likely to have increased in the to-be-reported quarter.
The Zacks Consensus Estimate for non-performing loans and leases of $6.46 billion implies a 20.8% increase from the prior-year quarter.
What Our Model Reveals About BAC’s Q3 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, which is not the case here, as you can see below.
Bank of America has an Earnings ESP of -0.24%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
The company 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 third quarter, BAC shares lost 6.7%, underperforming the industry. In the same time frame, shares of two of its close peers JPMorgan (JPM - Free Report) and Morgan Stanley (MS - Free Report) lost 1% and 11.2%, respectively.
3Q26 Price Performance
Image Source: Zacks Investment Research
JPMorgan is slated to announce third-quarter 2026 results on Oct. 13, while Morgan Stanley will announce quarterly numbers on the same day as BAC.
Let us check out the value Bank of America offers investors at current levels. The BAC stock is trading at a 12-month trailing price-to-tangible book (P/TB) of 1.89X. This is below the industry’s 3.02X. This shows that the stock is relatively inexpensive.
Price-to-Tangible Book (TTM)
Image Source: Zacks Investment Research
The BAC stock is trading at a discount compared with both JPMorgan and Morgan Stanley, which have P/TB ratios of 3.09X and 3.47X, respectively.
How to Approach BAC Shares Before Q3 Earnings?
Bank of America is well-positioned to continue to benefit from its vast scale, extensive capital markets operations and international footprint (which will drive significant fee income).
Management expects commercial loan growth in the mid to upper-single-digit range in the third quarter, with core commercial loan growth in the high-single-digit pace. Consumer loans are expected to grow in the low to mid-single-digit range in the quarter. Thus, supported by the expectation of loan growth in the second half of the year, along with robust deposit growth, fixed-rate asset repricing and balance-sheet optimization, BAC’s NII (FTE basis) is projected to grow in the upper end of 6-8% in 2026, roughly 7-8%.
BAC’s aggressive branch expansion across the United States as part of a broader strategy to solidify customer relationships and tap into new markets will further drive interest income growth over time. This will also help capitalize on cross-selling opportunities.
However, while Bank of America’s outlook remains constructive, investors may want to avoid rushing to buy the stock. Instead, they should closely watch management’s commentary on how geopolitical risk and market volatility affect the company’s performance, and the firm plans to navigate the current environment. Any revisions to BAC’s 2026 guidance for NII, IB, non-interest expenses and asset quality will be especially important, given the recent macro developments. Broader macroeconomic and policy trends that could materially shape the company’s performance trajectory should also be carefully considered.
Existing shareholders may hold the BAC stock, given its strong fundamentals and proven resilience. Potential investors should carefully weigh these factors and assess their risk tolerance before initiating positions.