BAC Q3 Deep Dive: Diversified Model Drives Growth, Eyes on Efficiency and Asset Quality

Financial services giant Bank of America (NYSE:BAC) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 10.8% year on year to $28.09 billion. Its GAAP profit of $1.05 per share was 11.4% above analysts’ consensus estimates.

Is now the time to buy BAC? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Bank of America’s third quarter performance received a positive response from the market, reflecting broad-based revenue momentum and efficiency gains. Management credited this outperformance to continued organic growth in core deposit and lending activities, with notable contributions from the consumer banking and global wealth segments. CEO Brian Moynihan emphasized that “all business segments contributed to earnings improvement,” citing disciplined expense management, strong digital adoption, and elevated customer experience scores as key factors supporting recent results. The company also highlighted robust asset quality and growth in investment banking and trading activities.

Looking ahead, Bank of America’s management expects further growth to be fueled by ongoing investment in technology, including expanded use of artificial intelligence to improve efficiency and customer service. CFO Alastair Borthwick noted that net interest income is projected to remain strong, supported by core loan and deposit growth and favorable asset repricing. The company is also focused on maintaining expense discipline, with headcount expected to remain stable and technology investments aimed at driving operating leverage. As Moynihan stated, “AI does give us a chance to manage some of the expense base a little differently going forward.”

Key Insights from Management’s Remarks

Management attributed the quarter’s results to disciplined execution in core lending, deposit growth, and operating leverage, while highlighting improvements in asset quality and digital engagement.

• Consumer banking momentum: The consumer banking segment delivered significant after-tax earnings growth, supported by increased net interest income, disciplined pricing, and continued expansion of digital engagement tools like the Erica virtual assistant.
• Wealth management strength: Global wealth and investment management showed strong client asset inflows and loan growth, driven by enhanced advisor productivity and new account openings, with digital channels becoming more prominent for onboarding.
• Investment banking rebound: Investment banking fees rose sharply, reflecting improved client activity as macroeconomic uncertainty surrounding trade and tariffs diminished. Management pointed to market share gains and successful execution in both advisory and underwriting.
• Sales and trading resilience: Sales and trading revenue growth was sustained for the fourteenth consecutive quarter, with particular strength in equities trading and robust demand from institutional clients for collateralized financing solutions.
• Expense discipline and operating leverage: Expense growth remained well below revenue growth, with management highlighting tight control of headcount and ongoing investments in technology as drivers of improved efficiency ratios and operating leverage.

Drivers of Future Performance

Management expects future performance to be driven by continued core loan and deposit growth, technology investment, and disciplined expense control, while monitoring interest rate and regulatory developments.

• Technology and AI adoption: Management believes that expanded use of artificial intelligence across customer-facing and back-office functions will drive operating leverage by enabling more transactions with stable or reduced headcount, though regulatory considerations may temper the speed of implementation.
• Asset repricing and loan growth: The company expects that maturing fixed-rate assets will be replaced at higher yields, supporting net interest income growth, while ongoing core loan and deposit growth outpaces broader industry trends.
• Expense and capital management: Management signaled an ongoing focus on expense discipline, with expectations for flat headcount and stable noninterest expenses in the near term, while capital ratios and regulatory requirements are being closely monitored for potential adjustments in capital return strategy.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace and scale of AI technology adoption and its effect on cost structure, (2) sustainability of loan and deposit growth across consumer and commercial segments, and (3) asset quality trends, particularly in commercial real estate and consumer credit. Execution on digital engagement initiatives and further evidence of operating leverage will also be important markers.

Bank of America currently trades at $52.24, up from $50.05 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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