Bank of America (NYSE:BAC) said it is on track to meet the medium-term financial targets it set at its 2025 investor day, with executives pointing to loan growth, rising net interest income and technology investments as drivers of earnings and returns.
Chief Financial Officer Alastair Borthwick said the bank expects net interest income to grow 8% in 2026 and at least 8% in 2027, above its medium-term target of 5% to 7% annual growth. The 2027 forecast assumes two interest rate increases reflected in the forward curve, he said.
Progress on returns and efficiency
Excluding a regulatory settlement charge, year-to-date earnings per share rose 19% and return on tangible common equity reached 16%, Borthwick said. The bank’s medium-term targets call for earnings per share growth of at least 12% and return on tangible common equity of 16% to 18%.
The bank’s efficiency ratio was 61% year to date, excluding the charge, compared with a target range of 55% to 59%. Operating leverage was 185 basis points on the same basis, below its medium-term goal of 200 to 300 basis points or more.
Asked where the bank still needed to improve, Borthwick said management spends substantial time on operating leverage, which requires both revenue growth and expense discipline. He also said the repricing of fixed-rate assets, including maturing securities, should support net interest income over time.
The company had a 10.9% common equity Tier 1 capital ratio, compared with its 10% regulatory minimum, Borthwick said. It repurchased $26 billion of shares over the preceding 12 months and had increased its quarterly dividend from 22 cents in the third quarter of 2022 to 32 cents in the latest third quarter.
Consumer and wealth businesses
Co-President Dean Athanasia said consumer banking generated $34 billion in year-to-date revenue, up 5%, and $10 billion in net income, up 10%. The business had an efficiency ratio of 51%, down one percentage point from a year earlier, as it works toward a 40% target.
Bank of America plans to enter six new markets and add 50 financial centers through 2028, Athanasia said. He also said the bank had opened 450,000 net new checking accounts and 3 million new card accounts.
In global wealth and investment management, revenue rose 13% to $21 billion and net income increased 31% to $4 billion. Athanasia said the bank expects about $80 billion in net new assets for the year but acknowledged that it needs to increase that pace to meet its goal.
To do so, the bank is hiring experienced financial advisers, seeking referrals from other parts of the company and targeting existing high-net-worth customers who do not yet have a wealth-management relationship, he said.
Technology and markets
Athanasia said Bank of America spends more than $13 billion annually on technology, including $4 billion on new initiatives and capabilities. More than 200,000 employees use artificial intelligence tools, and 20,000 developers using AI coding tools have seen a 24% productivity gain, he said.
Co-President Jim DeMare said the markets business was on pace for record revenues, with equities revenue up 36% year over year and prime brokerage growth approaching 50%. He said market appreciation was the largest contributor to prime brokerage growth, alongside increased resources and greater demand for equity financing.
DeMare also said the bank had added international client relationships and was investing in investment banking, payments and local coverage. In the third quarter, however, a difficult fixed-income environment weighed on the markets business. He described the impact as a matter of business mix rather than a structural problem.
About Bank of America (NYSE:BAC)
Bank of America Corporation (NYSE: BAC) is a diversified financial services company headquartered in Charlotte, North Carolina. It provides banking, lending, investment, payments and financial management services to consumers, businesses, institutional investors and governments.
The company’s consumer banking operations offer checking and savings accounts, credit cards, mortgages, home equity lending, auto loans and other consumer financial products. Through Merrill, Bank of America provides wealth management, investment advisory, brokerage and retirement services.
