Bank of America Shows Strong Growth Momentum with Record Net Interest Income January 29, 2026
Company Overview
Bank of America Corporation (BOA) stands as one of America’s largest financial institutions, operating across multiple segments including consumer banking, global markets, investment and brokerage services, and wealth management. The bank maintains a diversified revenue stream with its substantial investment and brokerage segment contributing approximately 18% of total revenue, positioning it well to capitalise on market volatility and capital markets activity.
Strong Fourth Quarter Performance
Bank of America delivered solid fourth quarter 2025 results with profit after tax and minority interests (PATMI) rising 12% year-over-year to US$7.6 billion. While earnings came in slightly below analyst estimates, full-year 2025 earnings reached 95% of forecasted levels. The bank demonstrated its commitment to shareholder returns by raising its dividend per share 8% year-over-year to US$0.28 and conducting US$6.3 billion in common stock net repurchases during the quarter, significantly higher than the US$3.5 billion repurchased in the same period last year.
Record Net Interest Income Drives Growth
The quarter’s standout performance came from record net interest income(NII), which surged 10% year-over-year, driven by robust Global Markets activity, fixed-rate asset repricing, and increased deposit and loan balances. This strong NII performance formed the foundation of the bank’s earnings growth, complemented by a 12% year-over-year recovery in investment and brokerage revenue and a 10% year-over-year decline in provisions.
Positive Outlook and Investment Thesis
BAC’s management has provided encouraging guidance for fiscal year 2026, projecting NII growth of 5-7% supported by continued fixed-rate asset repricing and deposit and loan growth. First quarter 2026 NII is expected to grow approximately 7% year-over-year, though expenses are anticipated to rise by around 4% year-over-year.
Research Recommendation
Phillip Securities Research maintains an ACCUMULATE recommendation on BAC with a raised target price of US$60, up from the previous US$56 target. The valuation assumes a 1.48x FY26e price-to-book value multiple and a 15.3% return on equity estimate. The research firm expects growth drivers to include higher NII from fixed-asset repricing and loan growth recovery, continued wealth management fee growth, higher global markets revenue from increased volatility, and a slower pace of expense growth.
Frequently Asked Questions
Q: What was Bank of America’s fourth quarter 2025 profit performance?
A: Bank of America’s PATMI rose 12% year-over-year to $7.6 billion in 4Q25, though it was slightly below estimates. Full-year 2025 earnings reached 95% of forecasted levels.
Q: What drove the bank’s earnings growth in the fourth quarter?
A: Earnings growth was primarily driven by record net interest income that increased 10% year-over-year, a 12% year-over-year recovery in investment and brokerage revenue, and lower provisions that declined 10% year-over-year.
Q: What is the bank’s guidance for 2026?
A: Bank of America expects FY26e NII growth of 5-7% and 1Q26e NII growth of approximately 7% year-over-year, with 1Q26e expenses expected to rise by around 4% year-over-year.
Q: What is Phillip Securities Research’s recommendation and target price?
A: Phillip Securities Research maintains an ACCUMULATE recommendation with a raised target price of US$60, up from the previous US$56 target, based on rolling valuations to FY26e.
Q: How did the bank return value to shareholders?
A: Bank of America raised its dividend per share 8% year-over-year to US$0.28 and conducted US$6.3 billion in common stock net repurchases in 4Q25, compared to US$3.5 billion in 4Q24.
Q: What are the expected growth drivers for 2026?
A: Expected FY26e growth drivers include higher NII from fixed-asset repricing and loan growth recovery, continued wealth management fee growth, higher global markets revenue from increased volatility, and slower expense growth.
Q: What makes Bank of America attractive as an investment?
A: The research house likes BAC for its substantial investment and brokerage segment representing approximately 18% of revenue and its ability to maintain stable NII during periods of market volatility.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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About the author
Glenn Thum
Glenn covers the Banking and Finance sector. He has had 3 years of experience as a Credit Analyst in a Bank, where he prepared credit proposals by conducting consistent critical analysis on the business, market, country and financial information. Glenn graduated with a Bachelor of Business Management from the University of Queensland with a double major in International Business and Human Resources.
