Having already hit 16% within the 16-18% target, how do you stay in the range, and were there any one-timers this quarter?

No one-timers to consider; the 16% reflected strong operating leverage. Management frames ROTCE as a medium-term range and focuses on steadily moving up the ladder (13% to 14% to 16%). “I don't think there's any one-timers to consider here... we just got to keep making progress towards our goal.”

Why is consumer loan and deposit growth slow despite strong spending and account openings, and where does AI take headcount?

Consumer deposits are finding their floor (four straight quarters of YoY growth, NIB picking up); lending is broad-based at 3-4% by choice given rate discipline. Headcount is managed down via attrition, needing ~1,300 hires/month to stay neutral, with AI still early but delivering benefits. “Each month, we have to hire 1,300 people round numbers to stay neutral... let attrition be your friend as we call it.”

As reform clarity improves, can you narrow the over-100-bps management buffer toward regulatory minimums?

Management is letting ratios drift down as clarity grows and targets a long-term buffer of ~50 bps over the minimum, funded by paying out all earned capital and growing into the nominal amount; earnings stability supports the tighter cushion. “I just think of the long term, 50 basis points over the minimum is more of what we're shooting for.”

BAC

Bank of America (BAC) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Financials· Apr 15, 2026

Source: earnings call transcript

Executive summary

Bank of America Q1 FY26 — Broad-based growth, 16% ROTCE and a raised NII outlook

A clean beat across every business: BofA converted better-than-expected spread income and double-digit fee momentum in markets, wealth and investment banking into positive operating leverage and higher returns, then lifted its full-year NII outlook as the rate curve shifted toward no cuts. Management leaned on expense discipline, AI-driven productivity and a durable low-cost deposit franchise, with credit still benign despite macro and private-credit watch-items.

Highlights

Revenue grew 7% YoY to $30.3B and diluted EPS rose 25% YoY to $1.11, with every segment growing revenue, earnings, average deposits and loans.
FTE net interest income of $15.9B, up 9% YoY, and full-year 2026 NII growth guidance raised to +6% to +8% versus 2025.
290 bps of positive operating leverage; efficiency ratio improved 170 bps YoY to 61% and ROTCE reached 16%.
Sales & trading revenue (ex-DVA) of $6.3B (+12% YoY), the strongest in a decade, with equities +30% YoY (a record) and zero trading loss days.
Investment banking fees of $1.8B (+21% YoY) led by M&A, and GWIM record revenue of $6.7B on $20B of asset-management net flows.

Concerns

CET1 ratio fell 14 bps QoQ to 11.2% as $9.2B of capital returns ($7.2B buyback + $2B dividends) exceeded earnings retention.
Provision of $1.3B included a modest net reserve release that HSBC's analyst pushed back on given macro uncertainty; release driven by CRE office and card improvement.
Consumer loan and deposit growth remained sluggish at roughly 3-4% YoY despite strong consumer spending.
Net charge-offs of ~$1.4B (48 bps net loss rate) ticked up modestly QoQ on seasonal card losses.
Management flagged a tougher second-half 2026 NII comp (less fixed-rate repricing) and watch-items across Middle East conflict, tariffs and inflation elevated into 2027.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 net interest income growth (vs 2025)	up 6% to 8% high materiality	FY2026 · FY26	High
Full-year 2026 positive operating leverage	more than 200 basis points high materiality	FY2026 · FY26	High
Medium-term operating leverage (3-5 year)	200 to 300 basis points medium materiality	3-5 years	Medium
Full-year 2026 effective tax rate	a little more than 20% medium materiality	FY2026 · FY26	High
Medium-term ROTCE target	16% to 18% high materiality	medium-term	Medium
CET1 management buffer over regulatory minimum	~50 basis points above minimum high materiality	long term	Medium
Remaining balance-sheet optimization (CD / repo runoff)	~$100 billion or so remaining low materiality	ongoing	Medium
Net regulatory capital requirement under proposed Basel III Endgame + G-SIB reforms	likely some reduction in overall capital requirements vs current regime high materiality	future periods	Low

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Consumer Banking Higher NII drove 5% revenue growth with strong expense management; over half of deposit balances sit in low- and no-interest checking. Credit performance remained solid and in line with expectations. Average deposits: $951B (4th consecutive quarter of YoY growth)Consumer checking accounts: 38.5M (record), +100k net newPrimary relationship share: >90%Digitally active households: 79%Digital sales penetration: 71% (vs 65% YoY)Low/no-interest checking share: >50% of balancesCredit card loan growth: +3% YoY	+5% YoY	+5% (revenue); net income +21%	—	Net income $3.1B, +21% YoY; 53% efficiency ratio; >500 bps operating leverage
Global Wealth & Investment Management (GWIM) Record revenue driven by higher asset-management fees and solid client flows; margin expanded on disciplined expense management. Adviser attrition fell and recruiting of new and experienced advisers roughly doubled versus prior-year Q1. Client balances: $4.6T, +10% YoYAsset management net flows: $20BAverage loans: +13% YoY (custom and securities-based lending)	$6.7B (record first quarter)	Net income +32%	—	Net income $1.3B, +32% YoY; pretax margin 26%
Global Banking Higher NII and improved noninterest income lifted results, with well-controlled expense (+1%). Investment banking momentum was a clear positive (fees captured firmwide); higher provision reflected reserve builds primarily for loan growth. Prior-year Q1 included non-repeating leveraged-finance gains. Average loans: +5% YoY (all lines contributing)Deposits: +13% YoYExpense growth: +1% YoY	$6.3B, +5% YoY	+5% (revenue); net income +8%	—	Net income $2.1B, +8% YoY; >350 bps operating leverage; return on allocated capital 16%
Global Markets (ex-DVA) Sales & trading had its strongest quarter in a decade amid volatile, geopolitically driven markets; equities posted a record. Higher revenue was offset by higher activity-linked and people costs plus continued investment; management continues to allocate more capital to the business. Average assets: $1.1T, +14% YoYTrading loss days: zeroFICC revenue: modestly higher YoY (commodities strong; FX/rates lower)Equities revenue: +30% YoY (record, led by Asia client financing and derivatives)	$7B, +7% YoY	+7% (revenue); net income up modestly	—	Net income ~$2B, up modestly (prior-year Q1 included ~$230M leveraged-finance gains); return on allocated capital 15%
All Other Little to note; a modest profit of about $100M in Q1.	—	—	—	Modest profit of roughly $100M

BAC operating KPIs by quarter

BAC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Sep 2026 Q3 FY26	Change vs prior quarter
Common equity tier 1 ratio (CET1)	11.9% We also ended with $201 billion of regulatory CET1 capital and a CET1 ratio of 11.9%, leaving us nearly 115 basis points of excess capital as we begin 2025. Source: earnings call transcript	11.8% Our CET1 level increased to $201 billion and the CET1 ratio is 11.8%. Source: earnings call transcript	11.5% And looking at regulatory capital, our CET1 level remained stable at $201 billion and the ratio is 11.5%. Source: earnings call transcript	11.6% Looking at regulatory capital, our CET1 level increased modestly to $203 billion, while the risk-weighted assets were relatively flat, and that drove our CET1 ratio higher to 11.6%. Source: earnings call transcript	—	11.2% From a regulatory perspective, the CET1 capital ratio declined 14 basis points to 11.2%, and that decline primarily reflects the capital return to shareholders above earnings generation as well as balance sheet growth and mix change in support of our clients, and our ratio remains well above regulatory requirements. Source: earnings call transcript	11.2% We ended the quarter with common equity Tier 1 capital of nearly $202 billion and a common equity Tier 1 ratio of 11.2%. Source: earnings call transcript	10.9% CET1 was 10.9%, down roughly 35 basis points from Q2, primarily reflecting higher funded and unfunded loans, and a $3 billion reduction in CET1 capital. Source: earnings call transcript	-0.3 pt
Return on tangible common equity (ROTCE)	13% And lastly, returns in the fourth quarter were 80 basis points of ROA and 13% return on tangible common equity. Source: earnings call transcript	14% We produced an 89 basis points return on assets and a 14% return on tangible common equity in the first quarter. Source: earnings call transcript	13.4% We produced a return on assets of 83 basis points and return on tangible common equity of 13.4% in the second quarter. Source: earnings call transcript	—	—	16% And importantly, we generated return on tangible common equity, ROTCE of 16%. Source: earnings call transcript	17% We generated return on tangible common equity of 17%. Source: earnings call transcript	—	+1 pt
Employees	~213K As far as head count goes, we've managed our head count carefully, and we've held it fairly flat through the 4 quarters of 2024 at around 213,000 people. Source: earnings call transcript	—	212K Today, we have 212,000. Source: earnings call transcript	213K So looking at the past 3 years, we've been able to lower our headcount from a peak of 217,000 to 213,000 now. Source: earnings call transcript	—	—	200K+ In addition, we added a slide on AI at Slide 20, which shows how our over 200,000 teammates are actively using AI-enabled capabilities across our company. Source: earnings call transcript	209K So -- but this company is success is due to the 209,000 people out there working every day, and they'll be a great leader for it next and the Board will make the decision when the time is there. Source: earnings call transcript	—
Efficiency ratio Consumer Banking	—	—	51% The efficiency ratio improved more than 200 basis points in the last 12 months to 51% in the quarter. Source: earnings call transcript	—	51% Business was also managed well for shareholders as we grew expense less than 2%, allowing us to improve our efficiency ratio to 51% and deliver nearly 350 basis points of operating leverage. Source: earnings call transcript	53% That resulted in over 500 basis points of operating leverage and a 53% efficiency ratio. Source: earnings call transcript	—	50% Business produced a 50% efficiency ratio and a 31% return on allocated capital. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
Erica / enterprise AI (agent-force rollout)	milestone	ongoing rollout, early stage

Risks & headwinds

CET1 decline as capital return exceeds earnings retention Q1 FY26

CET1 11.2%, down 14 bps QoQ; $9.2B returned ($7.2B buyback + $2B dividends) vs earnings generation

Mitigation:Remains well above regulatory minimums; over $200B CET1 capital; buffer deliberately managed toward a ~50 bps long-term target given low earnings volatility

Underwriting dispersion in private-credit / Global Markets loan vintages ongoing; faster-growth vintages

Not quantified; no material losses to date; new disclosure on Slides 24-25

Mitigation:Structural insulation — sponsor equity plus a substantial portion of fund-investor capital ahead of BofA; independently determined borrowing bases with ongoing performance tests contract before losses migrate; no reliance on sponsor marks; continuous collateral re-underwriting

Macro and geopolitical uncertainty (Middle East conflict, energy prices, tariffs, elevated inflation) 2026-2027

Inflation projected elevated into 2026-2027; gas +16% YoY in March; US GDP forecast ~2%

Mitigation:Diversified business model; continuous monitoring; impacts so far described as 'measured and absorbed' by economies

Reserve-release adequacy / lower peer-relative coverage amid macro uncertainty Q1 FY26

$1.3B provision including a modest net release; 5% scenario weight shifted from upside to baseline

Mitigation:Higher-quality loan mix (less unsecured/card, more wealth loans); lowest Fed stress-test loss rate in 13 of last 14 years; release confined to improving CRE office as that book shrinks

NII compression if rates fall below the forward curve next 12 months

-100 bps beyond forward = -$2B NII over 12 months

Mitigation:Multiple levers: balanced growth, funding optimization, roll-off of lower-yielding assets; deposit repricing discipline

Second-half 2026 NII growth to moderate on tougher comp H2 FY26

Less fixed-rate asset repricing in H2 2026 vs a larger H2 2025 rebasing benefit

Mitigation:Continued broad-based organic loan and deposit growth

Seasonal card charge-off uptick Q1 FY26

Net charge-offs ~$1.4B; 48 bps loss rate, modestly up QoQ

Mitigation:Continued commercial-portfolio stability and improved CRE office; overall benign credit environment

Capital-rule finalization uncertainty (Basel III Endgame / G-SIB surcharge) comment period ends mid-June 2026; effective in future periods / January 2028

Basel III modestly higher RWAs; 2025 G-SIB score could raise the surcharge by January 2028 under current rule; G-SIB indexing expected to more than offset

Mitigation:Proposed inflation indexing addresses the apparent rise; management expects a net reduction in overall requirements and to benefit as an organic-growth firm

Q&A highlights

With the stronger NII guide but unchanged expense and operating-leverage guides, how much of the better NII drops to the bottom line?

Management said the incremental NII does drop to the bottom line, and when it goes up they expect to land at the higher end of the operating leverage range, as they did this quarter.

“if it goes up, you'd expect us to see a higher end of the operating leverage range like we did this quarter.”

asked by Manan Gosalia · answered by Brian Moynihan

3 min read 7 chapters

Detailed narrative

Every-segment growth underpins a diversified beat

Brian Moynihan highlighted that every segment grew revenue, earnings, average deposits and loans in Q1 2026, calling it the biggest highlight of the quarter. Revenue rose 7% YoY to $30.3B with EPS up 25% to $1.11. Firmwide operating leverage was 290 bps, efficiency improved 170 bps to 61%, and ROTCE hit 16%.

Loans and deposits both grew and asset quality was stable-to-modestly-improved, reinforcing management's 'diversified earnings stream' thesis across a range of economic scenarios.

Net interest income beat and a raised full-year outlook

FTE NII was $15.9B, up 9% ($1.3B) YoY on loan/deposit growth, fixed-rate asset repricing and higher global-markets activity, and materially flat versus Q4 despite two fewer accrual days. Net interest yield rose 8 bps YoY to 2.07%. Management raised full-year 2026 NII growth guidance to +6-8% versus 2025, reflecting the Q1 beat and a curve that shifted from two expected cuts to none.

A 100 bps decline beyond the forward curve would cost ~$2B of NII over 12 months, while a 100 bps rise would add a little under $500M.

Expense discipline, headcount reduction and AI productivity

Noninterest expense was $18.5B, up ~4% YoY and in line with prior guidance, with the increase largely revenue-related incentives tied to double-digit growth in investment banking, asset-management fees and sales & trading. Headcount fell ~1,070 from year-end 2025 through attrition; management noted it must hire ~1,300 people a month just to stay neutral.

AI adoption is early-stage but delivering real benefits, with 90 installations live and all 200,000 teammates having access to AI tools, including Erica and a shift toward agentic interfaces.

Capital returns, buffer normalization and capital reform

The bank returned $9.2B to shareholders ($7.2B buybacks + $2B dividends), driving CET1 down 14 bps QoQ to 11.2% (over $200B of CET1 capital), still well above requirements. Management is deliberately letting ratios drift toward a long-term management buffer of ~50 bps over the minimum (from over 100 bps today), enabled by low earnings volatility.

On reform, Basel III Endgame would modestly raise RWAs but proposed G-SIB inflation indexing is expected to more than offset it, leaving BAC likely with somewhat lower overall requirements; the comment period ends mid-June.

Credit quality and reserve philosophy

Net charge-offs were ~$1.4B (48 bps net loss rate), down YoY and modestly up QoQ on seasonal card losses. Provision was ~$1.3B (vs $1.5B a year ago), including a modest net reserve release from card and CRE office improvement, partly offset by growth-related builds.

Commercial reservable criticized exposure fell to ~$24B and NPLs were flat QoQ, with the first quarter in over three years with no new NPL inflows into office. Management shifted 5% of scenario weight out of the upside into the baseline, leaving reserves skewed to downside-plus-baseline, and defended lower peer-relative coverage as a function of a higher-quality loan mix.

Private credit and the Global Markets loan-book disclosure

Management introduced updated disclosure (Slides 24-25) on the Global Markets loan portfolio, stressing no material losses. It acknowledged underwriting dispersion in the private-credit portion, particularly faster-growth vintages, but emphasized structural insulation: sponsor equity and a substantial portion of fund-investor capital must be impaired before BofA takes losses.

Exposure is governed by independently determined borrowing bases with ongoing performance tests, so borrowing bases contract as credits deteriorate. Management characterized recent market activity as a repricing of liquidity rather than systemic credit impairment.

Consumer health, proprietary spending data and markets momentum

BofA processes roughly $4.5T of total consumer spending annually, up 5% in 2025 and holding that pace in Q1 2026, with debit/credit card spending up 6% YoY (gas +16% in March). Management sees a resilient ~2% US GDP economy with solid wage growth across income cohorts.

Consumer deposits grew for a fourth straight quarter as balances find a floor, while markets and IB showed broad momentum — a 15th consecutive quarter of YoY trading revenue growth, equities' best quarter ever, and building IB pipelines.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.