Earnings Call Insights: Bank of America (BAC) Q4 2025
Management View
- Brian Moynihan, Chairman & CEO, stated that Bank of America reported net income of $7.6 billion for the fourth quarter, up 12% from the same period in 2024, with EPS at $0.98, an 18% increase. He highlighted, “We delivered 7% year-over-year revenue growth. This was led by a 10% improvement in net interest income, up to $15.9 billion on an FTE basis.” Moynihan emphasized growth in average loans (8%) and deposits (3%), with operating leverage of 330 basis points in Q4, and described 2025 as a year in which the company “delivered on our commitments to shareholders across the year with solid growth across revenue, earnings and returns.” He also noted $113 billion in yearly revenue, a 7% year-over-year increase, and a 13% rise in net income.
- Moynihan shared that client balances across investments, deposits, and loans surpassed $6.5 trillion, with consumer investment and workplace benefits each crossing $600 billion. He underlined momentum in Global Wealth and Investment Management, and noted that investment banking fees for the full year reached their highest since 2020, up 7% year-over-year.
- Alastair Borthwick, Executive VP & CFO, stated, “Net interest income of $15.9 billion on a fully taxable equivalent basis was strong and a little better than expected, and we saw good momentum from market-based fees that complemented the NII growth.” He emphasized expense discipline, noting, “the teams have shown good discipline across the businesses as we held headcount flat across the year despite the volume growth of clients and activity.” Borthwick also highlighted a 9% increase in tangible book value per share and $8.4 billion in capital returned to shareholders in the quarter.
Outlook
- Borthwick reiterated expectations from Investor Day, stating, “At Investor Day in November, we indicated our expectation that we would see 5% to 7% growth in net interest income in 2026 compared to 2025, and that’s still our belief today based on the latest interest rate curve, which includes two rate cuts in 2026.”
- For Q1 2026, Borthwick detailed, “we expect Q1 NII will grow roughly 7% from Q1 ’25 based on the assumptions on Slide 18, in line with our full year guidance.”
- Management expects about 200 basis points of operating leverage for 2026 and Q1 expenses to be about 4% higher than Q1 2025.
Financial Results
- Net income for Q4 was $7.6 billion and EPS was $0.98. Revenue for Q4 reached $28.4 billion, with $10.4 billion from sales and trading, investment banking, and asset management fees, which collectively grew 10% year-over-year.
- Deposits increased by $17 billion from Q3. Tangible book value per share rose to $28.73, a 9% increase from Q4 2024. The CET1 ratio declined to 11.4%, still well above the 10% regulatory minimum.
- Average loans for Q4 were $1.17 trillion, up $90 billion or 8% year-over-year, led by 12% commercial loan growth. Consumer loans increased by 4%.
- Noninterest expense for the quarter was $17.4 billion, up less than 4% year-over-year, attributed mainly to incentives and higher trading activity costs. Net charge-offs were $1.3 billion, down about $80 million from Q3, driving the net charge-off ratio to 44 basis points.
Q&A
- Betsy Graseck, Morgan Stanley, asked about adjusting the expense ratio guidance given accounting changes. Borthwick responded, “I don’t think so at this stage, Betsy, but similar to our comments at Investor Day, the numbers that we put out aren’t a cap on our ambition.”
- Kenneth Usdin, Bernstein Autonomous LLP, inquired about expense growth and operating leverage. Borthwick replied, “Ours is an organic growth company. We’re investing for growth all the time. And when we perform the way that we believe we can, we’re going to create operating leverage every year.”
- Michael Mayo, Wells Fargo, questioned technology and AI spend. Moynihan explained, “Total spending $13 billion plus, $4 billion plus in initiatives, that’s all new code… under the 365 Copilot rollout, which is now out across a total of 200,000 teammates and using it and learning from it, we expect to get good leverage of that.”
- John McDonald, Truist, asked about the timeline for CET1 ratio targets. Moynihan answered, “you’re going to keep peeling that number down through expansion of our markets business, expansion of lending and other uses of RWA… we’ll keep working that down.”
- Matthew O’Connor, Deutsche Bank, discussed loan growth drivers. Borthwick indicated expectations for “loan growth in the mid-single digits” with commercial leading, but consumer picking up.
- Additional analyst questions centered on expense discipline, deposits, NII growth, loan growth by segment, capital targets, and regulatory changes, with management emphasizing ongoing focus on operating leverage, headcount management, and technology-driven productivity.
Sentiment Analysis
- Analysts displayed a neutral to slightly skeptical tone, pressing for clarity on expense guidance, efficiency ratios, and the impact of accounting changes. Multiple analysts pressed for detail on expense management and operating leverage prospects.
- Management maintained a confident tone throughout, with Borthwick reiterating guidance and Moynihan emphasizing technology investment and discipline: “We have a tendency to actually deliver as opposed to talk about what we do in the future, and that’s what we focus on.”
- Compared to the previous quarter, management’s tone was similarly confident, while analysts’ questions reflected heightened scrutiny around expense controls and clarity on guidance targets.
Quarter-over-Quarter Comparison
- The current quarter saw continued emphasis on operating leverage and disciplined expense management, with explicit projections for 5%–7% NII growth in 2026, compared to a more general outlook last quarter.
- Management reiterated mid-single-digit loan growth and highlighted ongoing technology investments and headcount stability, in contrast to last quarter’s focus on organic growth and capital distribution.
- Analysts in both quarters focused on expense trajectory, efficiency ratios, and capital targets, but current quarter questions showed increased focus on the sustainability and mechanics of operating leverage given the recent accounting change.
- Key metrics such as net income, EPS, and net interest income all grew from the previous quarter, while tangible book value per share and capital returns were also higher.
Risks and Concerns
- Moynihan acknowledged ongoing macroeconomic risks: “Risks remain out there. They always do, but we’re encouraged and constructive on the year ahead.”
- Borthwick highlighted the impact of the tax equity investment accounting change on CET1, noting it will “come back into our capital over the next several years as those deals wind down.”
- Analysts raised concerns about regulatory uncertainty, headcount management, and the effects of potential rate caps on credit card yields. Moynihan addressed the potential for unintended consequences in regulatory proposals, emphasizing the company’s approach to responsible growth and affordability.
Final Takeaway
Bank of America closed 2025 with strong financial momentum, disciplined expense management, and a clear focus on driving operating leverage and returns. Management reiterated its commitment to 5%–7% net interest income growth for 2026, ongoing technology investments, and prudent capital deployment, positioning the company for continued growth amid a stable credit environment and positive client trends.