Bank of America NYSE: BAC reported broad-based second-quarter growth, with management pointing to stronger net interest income, fee revenue, client activity and operating leverage across each of its business segments.
CEO Brian Moynihan said the bank generated revenue of $31.6 billion, up 15% from a year earlier, while net income rose 27% to $9.1 billion. Earnings per share increased 34% to $1.21. Moynihan said the company delivered 6.6% operating leverage in the quarter, improved its efficiency ratio to 59% and generated a 17% return on tangible common equity.
“Every business segment contributed to our year-over-year growth,” Moynihan said, adding that each segment increased revenue and net income, generated operating leverage and improved its efficiency ratio.
Net Interest Income and Fee Businesses Drive Revenue Growth
Moynihan said revenue growth was led by net interest income, investment banking, wealth management fees and sales and trading revenue. Net interest income on a fully taxable-equivalent basis was about $16.2 billion, up 9% from the prior-year quarter. He attributed the increase to core lending and deposit-gathering strength, lending in Global Markets, repricing of lower-yielding assets and repayment of higher-cost funding.
Non-interest income grew 22%, helped by activity in wealth management, investment banking and markets. Investment brokerage fees rose 18%, while investment banking fees increased 50% year-over-year to more than $2.1 billion. Sales and trading revenue reached $7.2 billion, up 33%.
Moynihan also said Bank of America returned $8 billion to shareholders through dividends and share repurchases during the quarter. The bank ended the period with nearly $202 billion of common equity Tier 1 capital and a CET1 ratio of 11.2%.
Deposits, Loans Continue to Expand
Alastair, who reviewed the balance sheet and financial details on the call, said ending assets were steady at $3.5 trillion compared with the first quarter, as lower securities balances were replaced by loan growth and Global Markets activity. He said the bank maintained strong liquidity and funding while supporting client activity.
Average deposits totaled $2.02 trillion, up $49 billion, or 2.5%, from a year earlier. The increase included $19 billion of non-interest-bearing deposit growth, up 4%. Management said it was the company’s 12th consecutive quarter of average deposit growth, with Global Banking deposits up 8% year-over-year.
Average loans and leases increased to $1.2 trillion, up $88 billion, or 8%, from a year earlier. Ending loans were $1.22 trillion, up $71 billion, or 6%, marking the ninth consecutive quarter of growth in both average and ending loans. Commercial lending led the increase, with average commercial loans up 11% to $733 billion. Consumer loans rose 3%, led by securities-based lending and credit card balances.
Management Raises Operating Leverage Outlook
Bank of America now expects full-year 2026 net interest income growth to be at the upper end of its 6% to 8% range. Alastair said that outlook is supported by anticipated loan and deposit growth, fixed-rate asset repricing and balance sheet optimization. The guidance assumes modest loan and deposit growth in the second half of the year and is based on a forward curve that includes one 25-basis-point rate hike in September, according to management.
Non-interest expense was approximately $18.6 billion, up about $100 million from the first quarter and $1.4 billion from the year-earlier period. Management said the increase reflected continued investment in technology, sales teams, financial centers and brand marketing, along with higher activity-related costs in Global Markets.
After previously telling investors it expected more than 200 basis points of full-year operating leverage, management now expects full-year operating leverage of 300 to 400 basis points. Alastair said first-half operating leverage exceeded 450 basis points, driven by rising net interest income and strong fee-based performance.
Credit Quality Remains Stable
Credit quality remained stable, according to management. Provision expense was approximately $1.4 billion, and net charge-offs were also $1.4 billion, both largely unchanged from the first quarter. Consumer card charge-offs and delinquencies improved both year-over-year and sequentially. Commercial credit remained solid, with improvement in commercial real estate offset by isolated corporate and commercial lending losses.
Reservable criticized commercial exposures declined by about $2.3 billion from the first quarter to roughly $22 billion, primarily due to commercial real estate improvement. Nonperforming loans were stable at approximately $5.8 billion, and the company recorded a modest reserve release.
Segment Results Highlight Consumer, Wealth, Banking and Markets Strength
Consumer Banking net income increased 10% year-over-year to about $3.3 billion, while revenue rose 5% to $11.3 billion. The segment maintained a 51% efficiency ratio and delivered a 29% return on allocated capital. Average consumer deposits rose to $957 billion, and the bank added 162,000 net new checking accounts. Card spending increased 9% to $266 billion.
Global Wealth and Investment Management reported record revenue and pre-tax income. Net income rose 42% year-over-year to $1.4 billion, while revenue increased 16% to $6.9 billion. Client balances reached a record $4.9 trillion, and assets under management grew 17% to $2.3 trillion.
Global Banking revenue rose 10% to $6.2 billion, and net income increased 20% to more than $2 billion. Corporate investment banking fees, excluding self-led transactions, rose 50% to more than $2.1 billion. Average loans increased 7% to $413 billion, while average deposits rose 8% to $652 billion.
Global Markets also delivered a strong quarter. Excluding debit valuation adjustment, net income was $2.7 billion, up 70% from a year earlier. Sales and trading revenue excluding DVA rose 33% to $7.2 billion. Equities revenue reached a record $3.6 billion, while fixed income, currencies and commodities revenue was $3.5 billion, its strongest quarter in more than a decade.
Management also discussed the bank’s use of artificial intelligence. Moynihan said more than 200,000 employees are using AI-enabled capabilities, generating more than 400,000 prompts per day. He said the bank had more than 300 approved AI use cases, including 114 live generative AI use cases.
In closing remarks, Moynihan said the company continues to benefit from diversified revenue growth, stable credit costs and a constructive operating environment, citing strong consumer spending, broadening commercial lending and active capital markets pipelines.
About Bank of America NYSE: BAC
Bank of America Corporation is a multinational financial services company headquartered in Charlotte, North Carolina. It provides a broad array of banking, investment, asset management and related financial and risk management products and services to individual consumers, small- and middle-market businesses, large corporations, governments and institutional investors. The firm operates through consumer banking, global wealth and investment management, global banking and markets businesses, offering capabilities across lending, deposits, payments, advisory and capital markets.
Its consumer-facing offerings include checking and savings accounts, mortgages, home equity lending, auto loans, credit cards and small business banking, supported by a nationwide branch network and digital channels.
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