Bank of America - Stock Analyst Research

Target Price^*	US 60.00
Recommendation	ACCUMULATE› ACCUMULATE
Market Cap^*	-
Publication Date	17 Apr 2026

^*At the time of publication

Bank of America Corporation – Operating leverage delivers 17% PATMI growth

1Q26 PATMI rose 17% YoY to US$8.6bn and was slightly above our estimates at 26% of our FY26e forecast. Revenue rose 7% YoY, generating 290bps of operating leverage as expense growth (+4%) lagged. The efficiency ratio improved by 170 bps to 61%, with every segment contributing to YoY net income growth. DPS raised 8% YoY to US$0.28 and 1Q26 common stock net repurchases amounted to US$7.2bn (1Q25: US$4.5bn).
NII rose 9% YoY to US$15.7bn on Global Markets activity, fixed-rate repricing, and deposit (+3%) and loan growth (+9%). Sales and trading rose 13% YoY, with record equities revenue (+30%) partly offset by softer FICC (+2%, missed consensus). IB fees jumped 21% YoY to US$1.8bn; asset management fees +15% YoY. FY26e NII guidance raised to ~6% to 8% (from ~5% to 7%) and FY26e expenses expected to grow ~4% YoY.
Maintain ACCUMULATE with unchanged target price of US$60. Our FY26e earnings remain unchanged. Our GGM valuation assumes 1.48x FY26e P/BV and an ROE estimate of 15.3%. The strong PATMI growth and 290bps of operating leverage reflect the earnings power of BAC’s diversified business mix, with contributions from record equities trading, IB fee recovery, asset management growth, and raised FY26e NII guidance. We expect FY26e growth drivers from 1) higher NII on fixed-asset repricing and loan growth, 2) continued wealth management fee expansion, 3) higher Global Markets revenue on volatility, and 4) disciplined expense growth. We like BAC for its diversified fee income (investment and brokerage ~18% of revenue) and proven ability to sustain NII through rate cycles supported by a large sticky low-cost deposit base (US$2.02tn), continued fixed-rate asset repricing tailwinds, and Global Markets NII that helps monetise rate volatility.

The Positives
+ NII growth accelerates; FY26e guidance raised. NII rose 9% YoY to US$15.7bn, the 6th
consecutive quarter of YoY growth, on Global Markets activity, fixed-rate asset repricing, and
balance sheet expansion. Average deposits grew 3% YoY to US$2.02tn (11th consecutive
quarter of growth) and average loans rose 9% YoY to US$1.19tn. Net interest yield of 2.07%
rose 8bps YoY. Management raised FY26e NII guidance to 6% to 8% (from 5% to 7%), implying
continued earnings support from the core banking franchise as fixed-rate assets reprice.

+ Record equities trading and IB fee rebound drive fee income. Sales and trading revenue
rose 13% YoY to US$6.4bn, led by record equities revenue of US$2.8bn (+30% YoY, highest
growth in 15+ years) as March oil price volatility drove client activity. IB fees jumped 21%
YoY to US$1.8bn on advisory and equity underwriting strength, beating consensus estimates
of US$1.73bn. Asset management fees rose 15% YoY on market valuations, with total client
balances of US$4.6tn (+10% YoY). Consumer Banking net income rose 21% YoY, and GWIM
net income rose 32% YoY, emphasising the earnings contribution from fee-heavy segments.
+ Credit quality remains benign; provisions decline. Provisions fell 10% YoY to US$1.3bn,
with net charge-offs declining 3% YoY to US$1.4bn and the NCO rate improving 6bps YoY to
0.48%. Consumer NCOs benefited from lower credit card losses while commercial NCOs
declined due to continued CRE office improvements. The modest net reserve build of
US$21mn reflects management confidence in the outlook. BAC noted healthy client activity,
solid consumer spending, and stable asset quality as evidence of a resilient US economy,
notwithstanding geopolitical tail risks.

About the author

Glenn Thum
Research Analyst
PSR

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.

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Archive

Bank of America Corporation – Growth across the board (21 Jan 2026)

Bank of America Corporation – Earnings supported by NII growth (21 Oct 2025)

Bank of America Corporation – NII and investment fees support earnings (25 Jul 2025)

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