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    BAC
    Earnings call· Mar 2026(Q1 FY26)

    BANK OF AMERICA CORP /DE/ Q1 FY26 earnings call BAC

    Apr 15, 2026 Source

    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

    5

    • 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

    5

    • 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

    8
    CategoryTargetConfidence
    Full-year 2026 net interest income growth (vs 2025)
    up 6% to 8%
    high materiality
    High
    Full-year 2026 positive operating leverage
    more than 200 basis points
    high materiality
    High
    Medium-term operating leverage (3-5 year)
    200 to 300 basis points
    medium materiality
    Medium
    Full-year 2026 effective tax rate
    a little more than 20%
    medium materiality
    High
    Medium-term ROTCE target
    16% to 18%
    high materiality
    Medium
    CET1 management buffer over regulatory minimum
    ~50 basis points above minimum
    high materiality
    Medium
    Remaining balance-sheet optimization (CD / repo runoff)
    ~$100 billion or so remaining
    low materiality
    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
    Low

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    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

    Operational metrics

    6
    Net interest income rate sensitivity (12-month, dynamic deposit-based)
    -$2B (−100 bps beyond forward) / +<$500M (+100 bps)relative to the forward curve
    next 12 months

    Asymmetric downside skew reflects deposit-repricing dynamics as rates fall.

    Total consumer spending through Bank of America
    $4.5 trillion per year+5% in 2025 vs 2024; ~5% pace continued in Q1 FY26 vs Q1 FY25
    2025 / trailing

    Proprietary internal data management cites as evidence of consumer resilience and ~2% US GDP growth.

    Headcount
    down ~1,070 since year-end 2025reduced through attrition
    Q1 FY26

    Long-arc trend: fewer employees than in 2007 pre-Merrill/Countrywide; Investor Day framed reductions of ~50,000 in consumer and ~25,000 in ops over time.

    Global liquidity sources
    >$960Bwell above regulatory requirements
    Q1 FY26 quarter-end

    Liquidity remains strong alongside a $3.5T balance sheet (up 2% linked quarter).

    Effective tax rate
    17.5%seasonally lower
    Q1 FY26

    Seasonal Q1 low; full-year rate guided just above 20%.

    Consecutive quarters of YoY trading revenue growth
    15 quarters
    through Q1 FY26

    Management cited to argue markets strength is durable breadth, not episodic volatility.

    Industry KPIs

    13
    MetricValueDetails
    Loansaverage balances +9% YoY%
    Deposits>$2 trillion total; average +$59B (+3%) YoYUSD
    Rotce ROE16%%
    Cet1 ratio11.2%%
    Capital returns$7.2B buyback + $2B common dividendsUSD
    Fee income linesIB fees $1.8B (+21% YoY); sales & trading $6.3B (+12% YoY)USD
    Allowance reservesnet reserve release
    Net interest income$15.9B (FTE)USD
    Net interest margin2.07%%
    Net charge offs npls~$1.4B NCO; 48 bps net loss ratebps / USD
    Provision for credit losses~$1.3BUSD
    Private credit nbfi exposureno material losses (exposure amount not quantified on call)
    Efficiency ratio operating leverage61% efficiency ratio; 290 bps positive operating leverage% / bps

    Product announcements

    1
    ProductTypeDetails
    Erica / enterprise AI (agent-force rollout)milestone

    Risks & headwinds

    8
    CET1 decline as capital return exceeds earnings retentionQ1 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 vintagesongoing; 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 uncertaintyQ1 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 curvenext 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 compH2 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 uptickQ1 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

    8

    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 read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.