Given the strong operating leverage in H1, how sustainable is it, and what role will AI play?

Alastair confirmed the full-year operating leverage guide of 300-400 bps, noting H1 outperformed at 450 bps. He explained AI contributes to revenue (e.g., IB/GM capital raising for AI infrastructure) and operational efficiency (Slide 20 details 300 approved, 114 live generative AI use cases). Brian added that AI will lead to more efficient coding and better returns on technology spending. “AI plays a role, I think, in 2 ways. The first one is on the revenue side. There's obviously a big AI theme going on in the world. We're leading in investment banking and global markets around capital raising financing, that massive capital investment and infrastructure build around the world. So that's helping us there. And then you're asking a question that's really about sustainability going forward. Can it help us with our own operations? The answer is yes.”

How to box the H2 operating leverage given the strong H1 and tougher year-ago comparisons for NII and markets?

Alastair acknowledged tougher H2 comps due to NII and IB performance in H2 last year. He stated the 300-400 bps full-year guide accounts for this, but business conditions remain good, and they aim to maximize operating leverage. “And then remember, second quarter last year was a slower quarter for investment banking for the entire industry. So you think about it, if we put up $2.1 billion of investment banking this year, up 50%, if you kind of sustain that relative to what we did in third quarter of last year, which was $2 billion or so, you just don't get the same kind of uplift in the second half. So that's what we've got our minds on.”

How would changes in the rate environment affect the NII guide, and what's the outlook for middle market C&I loan growth?

Alastair confirmed the NII guide includes the anticipated September rate hike, which is a net positive despite some liability sensitivity in markets. He noted middle market C&I growth is consistent with overall commercial loan growth (around 8%) and expects continued strong loan growth in H2, including improving card growth (now 4% YoY). “So its impact this year is pretty modest because you're really only capturing anything in October, November and December. We will obviously adjust pricing in each of our segments for any rate hike but net-net-net, we expect that to be a positive. So that's in our guide right now where we're saying it was 5% to 7%, then it was 6% to 8%. Now we're saying it's going to be at the top end of that range, and that's with that hike.”

BAC

Bank of America (BAC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 14, 2026

Source: earnings call transcript

Executive summary

Bank of America Q2 FY26 — Strong Performance Driven by Broad-Based Growth and Operating Leverage

Bank of America delivered a strong second quarter, marked by broad-based organic growth across all business segments and significant operating leverage. The company achieved robust revenue and earnings expansion, driven by strong NII, fee-based businesses, and capital markets activity. Management remains confident in the franchise's long-term earnings power, supported by continued investments in technology and AI.

Highlights

Revenue grew 15% year-over-year to $31.6 billion.
Net income was $9.1 billion, up 27% from last year.
EPS increased 34% to $1.21 a share.
Achieved 6.6% operating leverage and improved efficiency ratio to 59%.
Returned $8 billion to shareholders through dividends and share repurchases.

Concerns

Inflation and tighter monetary policy
Tougher year-over-year comparisons for operating leverage in the second half

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Net Interest Income (NII) growth	upper end of 6% to 8% range high materiality	FY26 · 2026	High
Full-year 2026 Operating Leverage	300 to 400 basis points high materiality	FY26 · 2026	High
Net Interest Margin (NIM)	2.30% medium materiality	Medium-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Consumer Banking Delivered strong financial performance with continued investment in growth, innovation, and client engagement, leading to positive operating leverage for the fifth consecutive quarter. Efficiency ratio: 51%Return on allocated capital: 29%Average deposits: $957 billionNet new checking accounts: 162,000Card spending: $266 billionCard spending growth YoY: 9%Consumer investment assets: $640 billionConsumer investment assets growth YoY: 18%Active digital users: 50 millionActive Erica users: 24 millionDigital sales: 70% of total sales	$11.3 billion	5%	—	Net income: $3.3 billion
Global Wealth and Investment Management (GWIM) Achieved record revenue and pretax income, expanded profit margins, and continued client growth, driven by asset management fees, strong flows, and market valuations. Net income growth YoY: 42%Pretax margins: >27%Net new affluent households: 6,000Client balances: $4.9 trillionClient balances growth YoY: 12%Assets under management (AUM): $2.3 trillionAUM growth YoY: 17%AUM flows this quarter: $14 billionAUM flows past 4 quarters: $78 billionLoans: $277 billionLoans growth linked quarter: 5%	$6.9 billion	16%	—	Net income: $1.4 billion
Global Banking Delivered strong results with healthy client activity, near-record investment banking performance, strong treasury service revenue, and continued balance sheet growth. Net income growth YoY: 20%Total corporate investment banking fees (ex-self-led): $2.1 billionInvestment banking fees growth YoY: 50%Average loans: $413 billionAverage loans growth: 7%Average deposits: $652 millionAverage deposits growth: 8%Return on allocated capital: 15%	$6.2 billion	10%	—	Net income: $2.0 billion
Global Markets Delivered an exceptional quarter with record Equities revenue and strongest FICC quarter in over a decade, driven by client financing and strong trading performance. Net income (ex-DVA) growth YoY: 70%Equities revenue: $3.6 billionEquities revenue growth: 70%FICC revenue: $3.5 billionOperating leverage: 16%Return on allocated capital: 20%Sales & Trading revenue growth YoY: 17 consecutive quartersNet income growth YoY: 14 consecutive quartersUS revenue growth: 31%International business improvement: 38%	Sales & Trading revenue (ex-DVA): $7.2 billion	Sales & Trading revenue (ex-DVA) growth: 33%	—	Net income (ex-DVA): $2.7 billion
All Other Recorded a net loss larger than a year ago with no significant drivers noted.	—	—	—	Net loss: $292 million

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	Mar 2026 Q1 FY26	This call 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
Refreshed rewards program	update	since late May
FIFA World Cup marketing campaign	launch	Q2 FY26
New card products	launch	Q2 FY26

Risks & headwinds

Inflation and tighter monetary policy

no inflation and tighter monetary policy remain key risk

Tougher year-over-year comparisons for operating leverage in the second half Second half of FY26

NII went up more than the first half... second quarter last year was a slower quarter for investment banking

Mitigation:Continuing to maximize operating leverage where we can

Q&A highlights

How does BAC's deposit discipline compare to peers, and what's the near-term NII outlook given current pricing?

Alastair Borthwick reiterated confidence in NII momentum, raising the full-year guide to the upper end of 6-8%. He emphasized BAC's strong liquidity position and strategy of growing client operating accounts, which drives noninterest-bearing deposit growth (up 4%) and a favorable deposit mix, leading to lower rates paid.

“The lower rate paid is really about mix, Chris, we're competing out there for deposits like everyone else. We compete tooth and nail to get deposits where we can. But at the end of the day, our strategy is about relationship value all the things around digital and security and rewards that we talk about. And it's that favorable mix of growing the noninterest-bearing that makes a difference.”

asked by Christopher McGratty · answered by Alastair Borthwick

2 min read 8 chapters

Detailed narrative

AI Integration and Productivity

Brian Moynihan highlighted the extensive use of AI-enabled capabilities across the company, with over 200,000 teammates using these tools and generating more than 400,000 prompts daily. The company has over 300 approved AI use cases, with 114 live generative AI use cases, 34 of which are fully implemented. These tools aim to enhance productivity, consistency, and client service, driving significant economic opportunities.

Balance Sheet Strength and Optimization

The balance sheet remained strong with steady assets at $3.5 trillion, supported by robust liquidity and diversified funding. The CET1 ratio was stable at 11.2%, well above the 10% minimum. Management noted ongoing balance sheet optimization efforts, particularly in paying down repo and institutional CDs, which is expected to improve net interest yield and free up capital in the second half of the year.

Deposit Franchise Advantage

Bank of America's deposit base grew to $2.02 trillion, up 2.5% year-over-year, marking the 12th consecutive quarter of average deposit growth. Noninterest-bearing deposits increased by 4%. This growth was primarily driven by Global Banking and strong client engagement, allowing the company to maintain a stable and attractive funding advantage without chasing rate-sensitive balances.

Broad-Based Loan Growth

Average loans and leases increased 8% year-over-year to $1.2 trillion, marking the ninth consecutive quarter of growth. Commercial loans led this expansion, growing 11%, with broad-based contributions from domestic and international markets, and across business banking, commercial bank, and corporate bank segments. Consumer loans also grew 3%, driven by securities-based lending and credit card balances.

Credit Quality Stability

Credit quality remained stable and consistent with strong underwriting discipline. Provision expense and net charge-offs were both $1.4 billion, largely unchanged from Q1. Consumer card charge-offs and delinquencies improved, and commercial credit remained solid, with a decline in reservable criticized commercial exposures. The portfolio is well-positioned, supported by strong client fundamentals and disciplined risk management.

Consumer Banking Performance

Consumer Banking delivered a strong quarter with net income up 10% to $3.3 billion and revenue up 5% to $11.3 billion. The segment achieved its fifth consecutive quarter of positive operating leverage and a 51% efficiency ratio. Client engagement was robust, with 162,000 net new checking accounts and card spending up 9%. Digital engagement remains a differentiator with 50 million active digital users.

Wealth Management Growth

GWIM reported record revenue of $6.9 billion (up 16%) and pretax income, with net income increasing 42% to $1.4 billion. The segment added 6,000 net new affluent households and saw client balances reach a record $4.9 trillion. Assets under management grew 17% year-over-year to $2.3 trillion, supported by $14 billion of AUM flows this quarter.

Global Markets Outperformance

Global Markets delivered an exceptional quarter with net income (ex-DVA) up 70% to $2.7 billion. Sales & Trading revenue (ex-DVA) increased 33% to $7.2 billion, with Equities delivering a record $3.6 billion and FICC achieving its strongest quarter in over a decade at $3.5 billion. This marks 17 consecutive quarters of year-over-year sales & trading revenue growth.

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