BAC Q3 Earnings Beat on Solid Trading & IB Performance, Stock Gains

Bank of America’s BAC third-quarter 2025 earnings of $1.06 per share handily surpassed the Zacks Consensus Estimate of 94 cents. The bottom line compared favorably with earnings of 81 cents in the prior-year quarter.

BAC shares gained 4.9% in early trading in response to the better-than-expected quarterly results. A full day’s trading session will depict a clearer picture.

Behind BAC’s Headline Numbers

Bank of America recorded an improvement in trading numbers for the 14th straight quarter. Sales and trading revenues, excluding net DVA, grew 8.3% year over year to $5.35 billion. Fixed-income trading fees increased 4.6%, while equity trading income rose 13.7%. We had projected sales and trading revenues (excluding net DVA) of $5.06 billion.

Unlike the previous quarter, the investment banking (IB) performance was robust this time. IB fees (in the Global Banking division) of $1.16 billion increased 47.5% year over year. Equity and debt underwriting income increased 47% and 42.2%, respectively. Advisory revenues grew 52.7%.

Improvement in trading and IB fees, along with higher net interest income (NII), drove Bank of America’s total revenues. NII grew on a year-over-year basis on higher interest income related to Global Markets activity, fixed-rate asset repricing and higher deposit and loan balances, partially offset by the impact of lower interest rates.

While provisions declined in the quarter on a year-over-year basis, non-interest expenses increased, which hurt the results to some extent.
The company’s net income applicable to common shareholders grew 26% from the prior-year quarter to $8.04 billion. Our estimate for the metric was $6.85 billion.

BAC’s Revenues Improve, Expenses Rise

Net revenues were $28.09 billion, which surpassed the Zacks Consensus Estimate of $27.28 billion. Also, the top line increased 10.8% from the prior-year quarter.

NII (fully taxable-equivalent basis) grew 9% year over year to $15.39 billion. Our estimate for NII was $15.29 billion. Net interest yield expanded 9 basis points to 2.01%. We expected the metric to be 1.99%.

Non-interest income increased 13% from the prior-year quarter to $12.86 billion. This was driven by higher total fees and commissions. We had projected non-interest income of $11.66 billion.

Non-interest expenses were $17.34 billion, up 5.2% year over year. The rise was due to an increase in almost all cost components, except for professional fees. Our estimate for non-interest expenses was $17.29 billion.

The efficiency ratio was 61.39%, down from 64.64% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.

Bank of America’s Credit Quality Improves

Provision for credit losses was $1.30 billion, down 16% from the prior-year quarter. We estimated the metric to be $1.58 billion.

Net charge-offs declined 10.9% year over year to $1.37 billion. As of Sept. 30, 2025, non-performing loans and leases as a percentage of total loans were 0.46%, down from 0.53% in the prior-year period.

BAC’s Capital Position Strong

Book value per share as of Sept. 30, 2025, was $37.95 compared with $35.37 a year ago. Tangible book value per share was $28.39, up from $26.25 a year ago.

At the end of September 2025, the common equity tier 1 capital ratio (advanced approach) was 13.1% compared with 13.5% as of Sept. 30, 2024.

BAC’s Share Repurchase Update

In the reported quarter, the company repurchased shares worth $5.3 billion.

Our Take on Bank of America

Bank of America’s focus on digitizing and expanding operations, decent loan growth and relatively higher interest rates are likely to keep supporting growth. However, elevated expenses and a challenging operating backdrop pose major headwinds.

Bank of America Corporation Price, Consensus and EPS Surprise

 

Bank of America Corporation price-consensus-eps-surprise-chart | Bank of America Corporation Quote

Currently, BAC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of BAC’s Peers

Impressive trading and IB performance drove JPMorgan’s JPM third-quarter 2025 earnings of $5.07 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.83.

JPM’s markets revenues exceeded management's expectations of growth in the high-teens percentage rate. The metric grew 25% year over year to $8.9 billion. Specifically, fixed-income markets’ revenues jumped 21% to $5.6 billion, while equity markets’ numbers increased 33% to $3.3 billion.

Also, the IB business performance was far stronger than that expected by management.

JPMorgan recorded an increase in NII, driven by higher yields and a 7% year-over-year jump in total loans.

Citigroup Inc. C reported third-quarter 2025 adjusted net income per share of $2.24, up 48.3% from the year-ago period. The metric also surpassed the Zacks Consensus Estimate by 17.3%.

Citigroup’s results benefited from an increase in NII and non-interest revenues, alongside lower provisions. The company also registered a year-over-year increase of 17% in IB revenues, reflecting growth in advisory and equity capital markets. However, increased expenses and a weak capital position were the undermining factors for Citigroup.

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This article originally published on Zacks Investment Research (zacks.com).

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