BANK OF AMERICA CORP /DE/ (BAC) Q2 2025 Earnings Summary

Executive Summary

• EPS beat; revenue near consensus. BAC reported diluted EPS of $0.89, above S&P consensus of ~$0.86, and total revenue, net of interest expense of $26.5B; FTE revenue was $26.6B. EPS beat was aided by deposit growth, NII up 7% y/y, and strong markets/fee income . S&P Global consensus for Q2’25 was EPS ~$0.859 and revenue ~$26.73B; BAC’s EPS beat and revenue were modestly below consensus (S&P) . Values retrieved from S&P Global.
• NII acceleration intact; Q4’25 exit target reaffirmed. Management reaffirmed Q4’25 NII exit of $15.5–$15.7B, implying 6–7% full‑year NII increase, driven by fixed-rate asset repricing, deposit/loan growth, and cash‑flow swaps .
• Credit stable despite CRE office resolution. Net charge-offs were ~$1.53B (0.55% ratio) with consumer card losses normalizing and commercial losses elevated from office resolutions, largely reserved; delinquency trends improved .
• Capital/returns remain strong; buybacks up; dividend hike planned. CET1 ratio was 11.5%; BAC returned $7.3B to shareholders (repurchases $5.3B) and plans to raise the quarterly common dividend by 8% beginning in Q3’25, pending Board approval .
• Segments: Consumer Banking and Markets strong; Wealth & Global Banking steady. Consumer revenue +6% y/y; Markets delivered 13th consecutive y/y sales & trading growth; Wealth fee momentum; Global Banking revenue -6% y/y offset by treasury service charges; pipelines improving .

What Went Well and What Went Wrong

What Went Well

• EPS beat and resilient topline: EPS $0.89 vs $0.86 consensus; revenue increased to $26.5B, with NII up 7% y/y and fee income supporting topline .
• Markets strength and consistent growth: Sales & trading revenue up 14% y/y; FICC +16% to $3.2B; Equities +10% to $2.1B; 13th consecutive y/y growth in Markets .
• Strategic deposit growth and pricing discipline: Average deposits rose for the eighth consecutive quarter; consumer rate paid at 58 bps supported margins and NII .

What Went Wrong

• Global Banking revenue down y/y: Segment revenue fell 6% y/y due to lower NII, leasing revenue and investment banking fees; though treasury service charges improved .
• CRE office loss resolutions pressured commercial NCOs: Elevated office charge-offs drove commercial net charge-offs higher, even as most were previously reserved .
• Efficiency ratio remained elevated: Firm efficiency ratio ~64.6% (flat q/q), reflecting inflationary costs and continued investment, while operating leverage only modestly improved .

Financial Results

Segment Performance (Revenue & Net Income)

KPIs and Balance Sheet

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered another solid quarter, with earnings per share up seven percent from last year. Net interest income grew for the fourth straight quarter... Consumers remained resilient... and we saw good momentum in our markets businesses” — Brian Moynihan .
• “Bottom line is our range of NII expectation for the fourth quarter of this year remains unchanged at $15.5 billion–$15.7 billion. That would result in record NII and a full-year NII improvement of 6%-7%.” — Alastair Borthwick .
• “Asset quality remained strong, with net charge-offs at $1.5 billion for the sixth consecutive quarter... consumer delinquencies have been stabilizing, while card net charge-offs improved year-over-year and commercial nonperforming loans declined sequentially.” — Alastair Borthwick .
• “We also increased the capital return to our shareholders. In the second quarter, we repurchased $5.3 billion in shares and paid $2 billion in dividends.” — Brian Moynihan .

Q&A Highlights

• NII outlook: Reaffirmed Q4’25 exit; waterfall drivers include fixed-rate asset repricing, swaps, and modest loan/deposit growth; sensitivity shows -100 bps would lower NII ~$2.3B over 12 months, +100 bps adds ~$1B .
• Expenses: Expect flattish trend with potential seasonal declines in H2, enabling operating leverage; full-year expense growth +2–3% maintained .
• Capital buffer & buybacks: Target ~50 bps buffer; flexibility to grow into capital; buyback strengthened to ~$5.3B in Q2 .
• Deposit pricing: Continued disciplined pass-through of rate cuts; consumer rate paid continued declining (to 58 bps), supporting NII .
• Stablecoins and payments: Management sees industry participation in new rails as client demand evolves, analogous to the success in Zelle; approach is pragmatic and network-oriented .
• Regulatory/deregulatory outlook: Management advocated indexing the GSIB surcharge and reducing volatility in stress tests; sees potential relief in SLR treatment of cash/treasuries .

Estimates Context

Values retrieved from S&P Global.

Key Takeaways for Investors

• EPS beat driven by NII momentum, deposit growth, and strong Markets; revenue slightly below S&P consensus, but FTE revenue was consistent with guidance framing .
• NII acceleration remains the core 2H’25 catalyst; reaffirmed Q4’25 exit supports multi-quarter operating leverage and ROTCE trajectory .
• Credit normalization remains manageable; commercial office resolutions largely reserved; consumer delinquencies improved—reduces downside tail risk .
• Capital returns robust and rising—$5.3B buybacks in Q2 and planned 8% dividend increase in Q3’25—offer support to total shareholder yield .
• Segments: Consumer Banking shows durable revenue/NII leverage; Global Markets’ consistent growth diversifies earnings; Wealth fee momentum underpins defensible topline .
• Watch risks: lower-rate path and tariff/regulatory uncertainty could modestly temper NII and client activity; CRE office remains a monitored exposure though trending better .
• Near-term trading: Positive bias given Markets momentum and reaffirmed NII path; medium-term thesis anchored on deposit franchise, NII repricing, operating leverage, and capital returns .