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BAC vs. WFC: Which Banking Giant Offers Better Upside Potential?
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Key Takeaways
BAC offers better upside potential with stronger projected earnings growth and a lower forward P/E.
Wells Fargo's shares gained 14.1% in six months, outperforming BAC, while its ROE of 14.05% also leads.
BAC's stronger NII momentum supports growth, but downward estimate revisions warrant caution.
Shifting interest rates, evolving loan demand and a greater focus on efficiency are shaping the outlook for major U.S. banks. Against this backdrop, Bank of America (BAC - Free Report) and Wells Fargo & Company (WFC - Free Report) are pursuing distinct strategies to enhance profitability.
Both banks benefit from strong deposit franchises, diversified operations and established market positions. However, BAC’s extensive wealth management and investment banking (IB) businesses provide exposure to capital markets and fee-based income opportunities. WFC, meanwhile, is prioritizing operational efficiency, core banking expansion and lending opportunities.
Despite these strengths, interest rate uncertainty, credit risks and competitive pressures remain concerning. Subsequently, which banking giant offers better upside potential? Let us compare their fundamentals, growth prospects and valuations to identify the more attractive investment option.
The Case for BAC
Bank of America benefits from its diversified operations and favorable asset repricing. Its net interest income (NII) saw a compound annual growth rate (CAGR) of 6.7% during 2020-2025. The momentum continued in the first nine months of 2026, with NII, on a fully taxable-equivalent (FTE) basis, rising 6.9% year over year. The third-quarter NII reached a record $16.6 billion. Management projects NII growth of 8% in 2026 and at least 8% in 2027, supported by lending activity and fixed-rate asset repricing.
BAC’s low-cost deposit franchise provides stable funding and lending flexibility. As of Sept. 30, 2026, loans and leases rose 7.3% year over year to $1.25 trillion, while deposits increased 1.8% to $2.04 trillion. Non-interest-bearing balances accounted for more than 75% of third-quarter year-over-year deposit growth, with the average deposit rate at 1.49%. Further, $250 billion in cash and cash equivalents and $914 billion in average global liquidity sources reinforce its financial strength.
Capital markets provide another earnings catalyst. Following declines in 2022 and 2023, BAC’s IB fees rebounded 31.4% in 2024 and increased 8.4% in 2025. Fees rose another 14.6% year over year in the first nine months of 2026 despite an 11% third-quarter decline, excluding self-led deals. A healthy deal pipeline and improving capital market activity could support advisory and underwriting revenues.
BAC is also expanding its physical and digital presence to strengthen customer relationships and efficiency. The bank targets 50 new financial centers annually, alongside investments in Erica, Zelle and AI-powered tools. Management expects benefits from its AI project pipeline to increase from $250-$300 million in 2026 to $700 million in 2027, potentially enhancing operating leverage.
Solid capital levels further support shareholder distributions. BAC raised its quarterly dividend 14.3% to 32 cents per share following the 2026 Federal Reserve stress test, marking its sixth consecutive annual hike. Third-quarter capital returns totaled $8.3 billion, including $6 billion in buybacks. Its common equity tier 1 (CET1) ratio of 10.9% as of Sept. 30, 2026, provides flexibility for capital returns and strategic investments.
The Case for WFC
Wells Fargo’s prospects have improved following the removal of its asset cap in June 2025 and closure of its final outstanding consent order in March 2026. Unlike BAC’s established diversified franchise, WFC now has greater flexibility to expand lending, deposits and IB operations. Its focus on wealth management, payments and markets could further diversify revenues. Management targets a sustainable return on tangible common equity of 17-18% compared with 16.3% in third-quarter 2026.
WFC’s balance sheet offers room for expansion after years of regulatory restrictions. Loans and deposits saw six-year CAGRs of 0.4% and 1.3%, respectively, through 2025, with both increasing in the first nine months of 2026. Management expects fourth-quarter average loan growth to exceed its earlier mid-single-digit projection. However, revenues and NII witnessed CAGRs of negative 0.3% and positive 0.1%, respectively, during 2019-2025, trailing BAC’s historical NII performance.
Efficiency initiatives remain central to WFC’s profitability efforts. Non-interest expenses saw a negative CAGR of nearly 1% over the five years ended 2025, aided by workforce reductions and branch optimization. Headcount fell 7.8% year over year to approximately 194,400 as of September 2026, marking 25 consecutive quarters of reductions. Despite higher expenses in the first nine months of 2026, restructuring and technology investments could improve operating efficiency.
WFC also maintains a sound liquidity and credit profile. As of Sept. 30, 2026, liquid assets totaled $181.1 billion, while its liquidity coverage ratio of 122% exceeded regulatory requirements. S&P Global’s September 2026 credit rating upgrade to A- reflects improvements in governance, risk management and profitability, supporting financial flexibility.
Shareholder distributions remain another strength. Following the 2026 Federal Reserve stress test, WFC raised its quarterly dividend 11% to 50 cents per share. With $20.2 billion remaining under its repurchase authorization and a CET1 ratio of 10% as of Sept. 30, 2026, the bank retains capacity to reward shareholders. Its renewed strategic flexibility and efficiency measures offer a differentiated investment case against BAC’s established earnings momentum.
BAC & WFC: Price Performance, Valuation & Other Comparisons
Over the past six months, BAC shares have lost 0.2%, while shares of Wells Fargo have gained 14.1%. Hence, in terms of price performance, WFC has a clear edge over BAC.
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 9.97X. In contrast, Wells Fargo is trading at a 12-month forward P/E of 10.83X.
Therefore, BAC is currently trading at a discount compared with WFC.
P/E F12M
Image Source: Zacks Investment Research
Bank of America’s return on equity (ROE) of 12.15% is lower than WFC’s 14.05%. 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 18.4% and 14.9% year-over-year growth, respectively. In the past 30 days, earnings estimates for both years have been revised lower.
BAC Estimate Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for WFC’s 2026 and 2027 earnings indicates rallies of 16.1% and 10.1%, respectively. Earnings estimates for both years have been revised lower 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 have solid fundamentals and distinct growth opportunities. BAC benefits from stronger NII momentum, a diversified revenue base, digital investments and a relatively attractive valuation. WFC, meanwhile, stands to gain from the removal of regulatory restrictions, improving operational efficiency and greater lending flexibility.
While BAC’s higher projected earnings growth for 2026 and 2027, coupled with its lower forward P/E multiple, gives it a slight edge over WFC in terms of potential upside, WFC’s superior six-month price performance and ROE strengthen its investment appeal. However, downward earnings estimate revisions for both banks, interest rate uncertainty and credit risks warrant caution.
Thus, rather than aggressively accumulating either stock, investors may prefer to retain their existing positions. While BAC appears relatively more attractive on valuation and earnings growth prospects, waiting for improved earnings estimate trends and greater clarity on the operating environment could offer a better entry point.
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BAC vs. WFC: Which Banking Giant Offers Better Upside Potential?
Key Takeaways
Shifting interest rates, evolving loan demand and a greater focus on efficiency are shaping the outlook for major U.S. banks. Against this backdrop, Bank of America (BAC - Free Report) and Wells Fargo & Company (WFC - Free Report) are pursuing distinct strategies to enhance profitability.
Both banks benefit from strong deposit franchises, diversified operations and established market positions. However, BAC’s extensive wealth management and investment banking (IB) businesses provide exposure to capital markets and fee-based income opportunities. WFC, meanwhile, is prioritizing operational efficiency, core banking expansion and lending opportunities.
Despite these strengths, interest rate uncertainty, credit risks and competitive pressures remain concerning. Subsequently, which banking giant offers better upside potential? Let us compare their fundamentals, growth prospects and valuations to identify the more attractive investment option.
The Case for BAC
Bank of America benefits from its diversified operations and favorable asset repricing. Its net interest income (NII) saw a compound annual growth rate (CAGR) of 6.7% during 2020-2025. The momentum continued in the first nine months of 2026, with NII, on a fully taxable-equivalent (FTE) basis, rising 6.9% year over year. The third-quarter NII reached a record $16.6 billion. Management projects NII growth of 8% in 2026 and at least 8% in 2027, supported by lending activity and fixed-rate asset repricing.
BAC’s low-cost deposit franchise provides stable funding and lending flexibility. As of Sept. 30, 2026, loans and leases rose 7.3% year over year to $1.25 trillion, while deposits increased 1.8% to $2.04 trillion. Non-interest-bearing balances accounted for more than 75% of third-quarter year-over-year deposit growth, with the average deposit rate at 1.49%. Further, $250 billion in cash and cash equivalents and $914 billion in average global liquidity sources reinforce its financial strength.
Capital markets provide another earnings catalyst. Following declines in 2022 and 2023, BAC’s IB fees rebounded 31.4% in 2024 and increased 8.4% in 2025. Fees rose another 14.6% year over year in the first nine months of 2026 despite an 11% third-quarter decline, excluding self-led deals. A healthy deal pipeline and improving capital market activity could support advisory and underwriting revenues.
BAC is also expanding its physical and digital presence to strengthen customer relationships and efficiency. The bank targets 50 new financial centers annually, alongside investments in Erica, Zelle and AI-powered tools. Management expects benefits from its AI project pipeline to increase from $250-$300 million in 2026 to $700 million in 2027, potentially enhancing operating leverage.
Solid capital levels further support shareholder distributions. BAC raised its quarterly dividend 14.3% to 32 cents per share following the 2026 Federal Reserve stress test, marking its sixth consecutive annual hike. Third-quarter capital returns totaled $8.3 billion, including $6 billion in buybacks. Its common equity tier 1 (CET1) ratio of 10.9% as of Sept. 30, 2026, provides flexibility for capital returns and strategic investments.
The Case for WFC
Wells Fargo’s prospects have improved following the removal of its asset cap in June 2025 and closure of its final outstanding consent order in March 2026. Unlike BAC’s established diversified franchise, WFC now has greater flexibility to expand lending, deposits and IB operations. Its focus on wealth management, payments and markets could further diversify revenues. Management targets a sustainable return on tangible common equity of 17-18% compared with 16.3% in third-quarter 2026.
WFC’s balance sheet offers room for expansion after years of regulatory restrictions. Loans and deposits saw six-year CAGRs of 0.4% and 1.3%, respectively, through 2025, with both increasing in the first nine months of 2026. Management expects fourth-quarter average loan growth to exceed its earlier mid-single-digit projection. However, revenues and NII witnessed CAGRs of negative 0.3% and positive 0.1%, respectively, during 2019-2025, trailing BAC’s historical NII performance.
Efficiency initiatives remain central to WFC’s profitability efforts. Non-interest expenses saw a negative CAGR of nearly 1% over the five years ended 2025, aided by workforce reductions and branch optimization. Headcount fell 7.8% year over year to approximately 194,400 as of September 2026, marking 25 consecutive quarters of reductions. Despite higher expenses in the first nine months of 2026, restructuring and technology investments could improve operating efficiency.
WFC also maintains a sound liquidity and credit profile. As of Sept. 30, 2026, liquid assets totaled $181.1 billion, while its liquidity coverage ratio of 122% exceeded regulatory requirements. S&P Global’s September 2026 credit rating upgrade to A- reflects improvements in governance, risk management and profitability, supporting financial flexibility.
Shareholder distributions remain another strength. Following the 2026 Federal Reserve stress test, WFC raised its quarterly dividend 11% to 50 cents per share. With $20.2 billion remaining under its repurchase authorization and a CET1 ratio of 10% as of Sept. 30, 2026, the bank retains capacity to reward shareholders. Its renewed strategic flexibility and efficiency measures offer a differentiated investment case against BAC’s established earnings momentum.
BAC & WFC: Price Performance, Valuation & Other Comparisons
Over the past six months, BAC shares have lost 0.2%, while shares of Wells Fargo have gained 14.1%. Hence, in terms of price performance, WFC has a clear edge over BAC.
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 9.97X. In contrast, Wells Fargo is trading at a 12-month forward P/E of 10.83X.
Therefore, BAC is currently trading at a discount compared with WFC.
P/E F12M
Image Source: Zacks Investment Research
Bank of America’s return on equity (ROE) of 12.15% is lower than WFC’s 14.05%. 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 18.4% and 14.9% year-over-year growth, respectively. In the past 30 days, earnings estimates for both years have been revised lower.
BAC Estimate Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for WFC’s 2026 and 2027 earnings indicates rallies of 16.1% and 10.1%, respectively. Earnings estimates for both years have been revised lower 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 have solid fundamentals and distinct growth opportunities. BAC benefits from stronger NII momentum, a diversified revenue base, digital investments and a relatively attractive valuation. WFC, meanwhile, stands to gain from the removal of regulatory restrictions, improving operational efficiency and greater lending flexibility.
While BAC’s higher projected earnings growth for 2026 and 2027, coupled with its lower forward P/E multiple, gives it a slight edge over WFC in terms of potential upside, WFC’s superior six-month price performance and ROE strengthen its investment appeal. However, downward earnings estimate revisions for both banks, interest rate uncertainty and credit risks warrant caution.
Thus, rather than aggressively accumulating either stock, investors may prefer to retain their existing positions. While BAC appears relatively more attractive on valuation and earnings growth prospects, waiting for improved earnings estimate trends and greater clarity on the operating environment could offer a better entry point.
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.