BAC Q1 Deep Dive: Deposit Growth and Diversified Lending Drive Steady Start to 2025

Financial services giant Bank of America (NYSE:BAC) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 6% year on year to $27.37 billion. Its non-GAAP profit of $0.90 per share was 10.7% above analysts’ consensus estimates.

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

StockStory’s Take

Bank of America’s first quarter was marked by steady deposit growth, expanded lending across business lines, and resilient credit quality, which management credited for the company’s financial performance. CEO Brian Moynihan emphasized that client activity and organic growth “remained strong across the businesses,” highlighting continued momentum in both consumer and commercial banking. CFO Alastair Borthwick pointed to robust net interest income, disciplined expense management, and stable asset quality as additional contributors to the quarter. Management noted that investments in digital engagement and expansion of relationship banking were key to supporting ongoing growth in client relationships and activity.

Looking ahead, Bank of America’s management expects moderate loan and deposit growth, with net interest income supported by ongoing repricing of fixed-rate assets and prudent balance sheet management. Borthwick stated, “Our fourth quarter exit rate expectation for NII is unchanged,” citing expectations for stable consumer spending and a gradual improvement in market activity. However, the leadership team acknowledged that uncertainty around tariffs, interest rates, and broader economic policy could impact both the pace and composition of future growth. Management remains focused on maintaining a diverse, well-collateralized loan portfolio and investing in technology to enhance operational efficiency.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to strong organic growth in client relationships, technology-driven efficiency, and diversified lending, while flagging expense pressures from compliance and market-related costs.

• Deposit momentum continues: The company achieved its seventh consecutive quarter of deposit growth, with average balances near $2 trillion, driven by both consumer and commercial clients. Management cited disciplined pricing on deposits and stability in non-interest-bearing balances as important factors supporting net interest income.
• Diversified loan growth: Commercial loans grew in nearly every business line, reflecting investments in relationship managers and expansion into new markets such as Switzerland and the UK. Consumer lending also increased, aided by targeted purchases of high-quality residential loans and ongoing growth in small business lending.
• Digital engagement and sales: Digital channels accounted for 65% of consumer product sales, and the bank’s Erica AI assistant surpassed 2.7 billion interactions. Management highlighted digital adoption as a key driver of efficiency and customer satisfaction, with more than 14 billion logins in 2024.
• Wealth management expansion: The wealth management segment added 7,200 net new households and $24 billion in net asset flows during the quarter, with continued momentum in integrating banking and investment services. Asset management fees increased, and digital account openings remain the predominant method for new clients.
• Expense and compliance headwinds: Non-interest expenses rose due to elevated payroll taxes, incentive costs, and higher compliance spending, as well as litigation expenses. Management indicated investments in technology and personnel remain critical, but ongoing attention to cost control is needed amid market and regulatory changes.

Drivers of Future Performance

Management’s outlook for the remainder of the year centers on moderate loan and deposit growth, expense discipline, and navigating policy uncertainty.

• Interest rate and policy impacts: The company expects net interest income growth to continue, supported by asset repricing and deposit management, but flagged uncertainty from potential interest rate cuts and tariff changes. Management highlighted that multiple scenarios are considered in reserve planning, including lower GDP growth and higher inflation.
• Expense management and investment: Ongoing investments in technology, compliance, and personnel are expected to support organic growth and operational efficiency. Management guided for full-year expense growth of 2% to 3%, noting expenses may trend toward the higher end of this range depending on fee income and regulatory developments.
• Credit quality and risk controls: Asset quality remains a focus, with management emphasizing prudent underwriting and diversified loan exposures. The company believes its strong reserve position, with reserves modeled for a 6% unemployment scenario, positions it well for potential economic stress.

Catalysts in Upcoming Quarters

Looking ahead, our analysts will be monitoring (1) continued trends in loan and deposit growth across business lines, (2) the company’s ability to control expenses amid ongoing investments in technology and compliance, and (3) any shifts in credit quality or reserve levels as economic and policy factors evolve. Updates on digital engagement and adoption of new technology platforms will also be key indicators of execution.

Bank of America currently trades at $46.92, up from $36.71 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

Now Could Be The Perfect Time To Invest In These Stocks

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.