Bank of America maintains $15.5B–$15.7B Q4 NII outlook as AI investments drive efficiency

Earnings Call Insights: Bank of America (BAC) Q2 2025

Management View

• CEO Brian Thomas Moynihan highlighted solid consumer spending, improving credit quality, and robust commercial loan growth as key drivers for the quarter. He noted, “We produced another solid quarter of revenue growth, earnings and returns,” attributing the results to “strong organic growth across all the businesses.” Moynihan emphasized the ongoing impact of technology investments, especially in digitization, machine learning, and AI, noting the company is “starting to see at the beginnings of the AI practices that we develop pay off.”
• Moynihan announced that revenue reached $26.6 billion on an FTE basis, net income was $7.1 billion, and EPS was $0.89. He reported 4% revenue growth and 7% EPS growth year-over-year, with net interest income (NII) of $14.8 billion—a record for the company. He also highlighted that average deposits have grown for eight consecutive quarters and that the company repurchased $5.3 billion in shares and paid $2 billion in dividends during Q2.
• CFO Alastair M. Borthwick stated, “Revenue of $26.6 billion on an FTE basis grew more than 4% from second quarter last year.” He added, “NII grew 7% and represented 55% of total revenue,” with investment and brokerage fees rising 11% and sales and trading revenue up 15% year-over-year. Borthwick also highlighted expenses below $17.2 billion, down nearly $600 million from Q1, and provision expense at $1.6 billion, with asset quality remaining strong.

Outlook

• Borthwick reiterated that the range of NII expectations for the fourth quarter of 2025 remains unchanged at $15.5 billion to $15.7 billion, projecting “record NII and a full year NII improvement of 6% to 7%.” He cited fixed rate asset repricing and ongoing loan and deposit activity as primary drivers for second half growth. “Our expectation for the exit rate of NII in the fourth quarter remains unchanged, and the drivers of the improvement remain largely the same,” Borthwick stated.
• Management maintained that improved efficiency and operating leverage are anticipated in the second half of 2025, supported by technology and cost controls.

Financial Results

• The company reported revenue of $26.6 billion on an FTE basis, net income of $7.1 billion, and EPS of $0.89. NII of $14.8 billion set a new record, representing 55% of total revenue. Average deposits increased by $22 billion from Q1, and loans reached $1.13 trillion, up 7% year-over-year, driven by a 10% increase in commercial loans.
• Noninterest expense was just under $17.2 billion, a decline of nearly $600 million from Q1, attributed to the absence of seasonal payroll tax elevation and lower litigation costs. Net charge-offs remained stable at $1.5 billion for the sixth consecutive quarter, with consumer net charge-offs declining and commercial real estate office charge-offs elevated but largely reserved.
• The company returned $7.3 billion to shareholders in the quarter through dividends and share repurchases. Tangible book value per share rose to $27.71, up 9% year-over-year.

Q&A

• John Eamon McDonald, Truist Securities, asked about retail deposit share growth. Moynihan responded that “we’re growing deposits faster in the industry and 92% of core checking of the checking accounts, consumer satisfaction is the highest it’s ever been.”
• Kenneth Michael Usdin, Bernstein Autonomous LLP, questioned the trajectory of fixed rate asset repricing. Borthwick answered, “I think I would use linear. I think that’s probably the easiest way to think about it.” Usdin also asked about cash flow hedges, to which Borthwick replied, “there’s no change there at all. That’s exactly what we’re doing… Just as the old ones roll off with lower coupons, we’re replacing them with new ones with higher coupons.”
• Matthew Derek O’Connor, Deutsche Bank, asked about expense growth and regulatory costs. Moynihan explained, “the overall inflation rate and expenses are starting to flatten out… we’ve got stability in terms of headcount, in terms of third-party rents and all that stuff is sort of flattening out.”
• Steven A. Alexopoulos, TD Cowen, inquired about AI’s impact on headcount. Moynihan outlined the transformation, stating the company reduced consumer business headcount by half over 15 years while growing deposits and checking accounts, attributing this to scalable technology and digital adoption.
• Erika Najarian, UBS, asked about capital buffer strategy. Moynihan stated, “we believe an appropriate buffer is 50 basis points plus or minus… and that’s what we are running down to, pushing down before.”

Sentiment Analysis

• Analysts focused on deposit growth sustainability, NII guidance, expense controls, and capital allocation, displaying a slightly positive to neutral tone, probing for additional upside and clarity. Questions were often detailed but not confrontational.
• Management maintained a confident and measured tone, reinforcing stability and organic growth, frequently using phrases like “we feel good about” and “we have a lot of flexibility.” During Q&A, the tone remained steady, with Moynihan and Borthwick consistently reiterating disciplined strategy and strong performance.
• Compared to the previous quarter, both analyst and management sentiment remained steady and constructive, with management demonstrating increased confidence in technology-driven efficiency and NII momentum.

Quarter-over-Quarter Comparison

• NII guidance for Q4 2025 was reaffirmed at $15.5 billion to $15.7 billion, unchanged from prior guidance.
• Commercial loan growth accelerated from 7% to 10% year-over-year, and average deposits continued to rise for the eighth consecutive quarter.
• Expense control improved, with noninterest expense declining from Q1, while the previous quarter saw higher seasonal costs.
• Management’s emphasis on AI and technology investments intensified, with more explicit references to scale, operational leverage, and productivity gains.
• Analyst questions shifted toward deeper inquiry on AI impacts, headcount efficiency, and capital deployment, reflecting growing interest in long-term structural changes.

Risks and Concerns

• Management identified continued uncertainty from tariffs, volatility in interest rate expectations, and elevated commercial real estate office charge-offs as ongoing challenges.
• Moynihan acknowledged, “We resolved a number of credits in this quarter — in the second quarter. When those credits closed in the third quarter, you’ll see the reduction in NPLs related there, too.”
• Borthwick noted, “There remains a good amount of uncertainty from the impacts related to announced tariffs and the potential for continued uncertainty.” Management reiterated strong reserves and disciplined risk management as mitigation strategies.

Final Takeaway

Bank of America’s second quarter 2025 results underscore consistent organic growth, robust commercial lending, and tangible benefits from long-term investments in technology and AI. Management reaffirmed its record NII outlook for the year and highlighted disciplined cost and capital management, while remaining attentive to external risks and committed to further efficiency gains through continued digital transformation.

Read the full Earnings Call Transcript