Bank of America Corporation (BAC) Earnings & Analysis

Latest quarter

Bank of America’s Q3 FY2026 revenue and adjusted earnings per share both missed the consensus. Revenue as the consensus counts it was $30.0 billion, against an estimate of $30.6 billion; adjusted EPS was $1.08, against $1.11.

On the company’s reported basis, revenue was $47.8 billion, compared with $48.2 billion a year earlier. Diluted EPS was $0.96, down from $1.06. The reported revenue figure differs from the figure used for the consensus comparison.

Bank of America’s gross margin rose to 62.7% from 58.2%, while its operating margin declined to 18.8% from 19.6%. For Q2 FY2026, the preceding quarter, the company’s free cash flow was $29.0 billion, compared with −$9.1 billion in Q2 FY2025.

Bank of America operates consumer banking, wealth management, global banking and markets businesses. The company earns income both from the spread on lending and funding and from fees and market activity.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the latest available earnings call, which covered Q2 2026, CEO Brian Moynihan said revenue growth came from net interest income, investment banking, wealth management fees, and sales and trading. He said average deposits and loans grew as clients continued to engage with the bank.

CFO Alastair Borthwick said commercial lending growth had broadened beyond Global Markets activity, while consumer loan growth was led by securities-based lending and credit cards. In the question-and-answer session, he said each line of Global Banking was contributing to commercial loan growth, rather than growth being confined to AI-related investment.

Borthwick said higher loan and deposit balances and the repricing of fixed-rate assets helped net interest income, partly offset by lower average short-term rates. Asked about rates, he said the bank expected a rate increase in the forward curve to be a net positive, although its effect on that year would be modest. Moynihan said the bank had reduced activity in some liquid lending products, including auto loans, where pricing had become tight.

On expenses, Borthwick said Q2 non-interest expense reflected investment in technology, sales teams, financial centers and marketing, as well as activity-related costs in Global Markets. Asked about expense guidance, he said revenue-linked brokerage, clearing, exchange and adviser incentive costs made it difficult to keep updating an expense figure, so the bank had largely moved toward using operating leverage instead.

Moynihan said employees were using AI-enabled tools for tasks including research, meeting preparation and coding. He also said the bank considered AI’s potential impact on clients’ industries and companies as part of its underwriting work. Borthwick said the bank expected a similar level of Global Markets net interest income in the third and fourth quarters to that seen in the first and second quarters.

Guidance

Bank of America management projects net interest income growth of 8% in 2026 and at least 8% in 2027. On the Q2 call, Borthwick had expected 2026 growth at the upper end of the bank’s 6%-8% range.

On that call, Borthwick also raised the bank’s full-year operating leverage expectation to 300-400 basis points, from more than 200 basis points. He said the bank had largely moved away from updating an expense figure because some costs depend on revenue.