Bank of America Earnings: Don’t Be Surprised if Net Interest Income Overdelivers

Key Morningstar Metrics for Bank of America

• Fair Value Estimate
  : $66.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Bank of America’s Earnings

Bank of America BAC reported robust second-quarter 2026 earnings, sending shares up a low-single-digit percentage on the back of 15% net revenue growth and 34% earnings per share growth from a year ago.

Why it matters: Despite a stronger relative footing in debt capital markets, Bank of America still enjoyed an equities tailwind across its investment banking and trading businesses to complement positive operating leverage and raised net interest income guidance.

• From 2013-25, the firm averaged nearly 84% higher annual FICC trading revenue than in equities. We thus believe the firm generating more equity trading revenue this past quarter truly encapsulates just how explosive equity trading volume has become, growing 70% from a year ago.
• We’ve been inspired to see net interest income guidance raised each quarter, beginning the year in the 5%-7% range and now at the upper end of 6%-8%, driven by balance sheet growth and fixed-rate asset repricing, though we believe the bank is still underpromising to overdeliver.

The bottom line: After digesting the second-quarter results for wide-moat Bank of America, we are raising our fair value estimate to $66 per share from $65, viewing shares as undervalued while held-to-maturity fixed-rate securities are continually redeployed at higher rates and the firm optimizes its operational footprint.

• As one of the pioneers of digital banking adoption, we believe the investment in bolstering platforms like Erica and Cash Pro is beginning to shine, demonstrated by 600 basis points of positive operating leverage this quarter, leading us to a more constructive expense growth forecast.
• We’ve raised our near-term trading revenue forecasts due to the perfect storm of geopolitical uncertainty and elevated asset levels, while the roll-over of low-yield, fixed-rate investments made in 2020-21 propels long-run net interest margin expansion, even in a lower-rate environment at midcycle.