BofA Tops Estimates as Trading Beats and Lending Revenue Rises – Yahoo Finance
(Bloomberg) — Bank of America Corp.’s equity traders posted their best fourth quarter ever as the company reaped the benefits of volatile markets and net interest income topped analysts’ estimates.
Revenue from equity trading rose 23% to $2.02 billion in the final three months of the year, according to a statement Wednesday. Analysts had been expecting equity-markets revenue of close to $1.9 billion. That helped give Bank of America earnings of 98 cents a share, topping analysts’ estimates. Still, shares declined amid concerns about expenses.
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“With consumers and businesses proving resilient, as well as the regulatory environment and tax and trade policies coming into sharper focus, we expect further economic growth in the year ahead,” Chief Executive Officer Brian Moynihan said in the statement. “While any number of risks continue, we are bullish on the US economy in 2026.”
Volatility has whipsawed markets since US President Donald Trump announced tariffs on trading partners around the world last year. That’s been good news for the markets businesses at Bank of America and its rivals across Wall Street as they’ve benefited from a surge in client activity as investors reposition their holdings.
The second-largest US bank also said that net interest income, a key source of revenue for the company, rose 9.7% to $15.8 billion. Analysts had expected a 7.8% increase for NII, the revenue collected from loan payments minus what depositors are paid.
Bank of America said in a presentation accompanying the results that it expects NII to rise 7% for 2026’s first quarter on a fully taxable equivalent basis. For the full year, NII is likely to grow 5% to 7%, the company said.
That guidance suggests that first-quarter “expenses will be worse than we and the market expect,” Piper Sandler Cos. analyst Scott Siefers said in a note to clients. “Better-than-consensus NII expectations are good, but the cost guide could offset and keep expectations more tethered.”
Shares of Charlotte, North Carolina-based Bank of America dropped 3.8% to $52.48 on Wednesday, the biggest decline on an earnings day since 2020. They’ve gained 15% in the past 12 months, less than the 19% increase in the S&P 500.
Bank of America’s top-line revenue came in at $28.4 billion, one of the highest quarters on record and topping the analyst consensus of $27.8 billion. The increase came as the company kept a lid on expenses, which rose 3.9% to $17.4 billion, just shy of analysts’ estimates.
Headcount, Attrition
The firm is keeping headcount in check, letting attrition lower the number over time.
“We’ve absorbed inflation and everything, while we’re doing that,” Moynihan said on a conference call with analysts.
The fourth-quarter numbers offer a further look at how the biggest US banks fared during the first year of Trump’s return to office. Investors are also eager to hear details on the national economy from executives whose firms cater to large swaths of American consumers and businesses.
On Tuesday, JPMorgan Chase & Co. reported earnings that beat analysts’ estimates, with trading activity boosting results, despite an unexpected decline in investment-banking fees. Executives expect deals to pick up in 2026, with a strong pipeline and corporate clients who pushed off activity coming back to the market.
At Bank of America, investment-banking revenue rose 0.7%, better than analysts expected amid renewed strength in dealmaking. Fees for advising on mergers and acquisitions rose 6.1%, and revenue from debt issuance increased 5.9%. That came amid an 18% slump in revenue from equity issuance.
“While timing and deal flows shift from quarter to quarter, we feel very good about our pipeline for the year ahead,” Chief Financial Officer Alastair Borthwick said on a conference call with media.
The company’s loan balances rose to $1.19 trillion by the end of the fourth quarter, up 8.2% from a year earlier and topping analysts’ estimates of almost $1.18 trillion. Lending has been a key focus for investors, with lower interest rates expected to spur more borrowing as loans become less costly.
–With assistance from Georgie McKay.
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