As at 5 June 2026

Executive Summary

Key highlights

In this report, we review the 1Q26 results released in April 2026:

Financial results at a glance:

• NII increased by 9% from $14.4 billion in 1Q25 to $15.7 billion in 1Q26, driven by higher Global Markets activity, loan and deposit growth, and fixed-rate asset repricing, partially offset by lower interest rates. Net interest yield improved by 8 basis points (bps) to 2.07%.

• NIR grew by 5% from $13.8 billion in 1Q25 to $14.5 billion, supported by stronger sales and trading revenue, higher asset management fees and investment banking fees. Sales and trading revenue rose 13% to $6.4 billion, while investment banking fees increased 21% to $1.8 billion.

• Credit performance: Provision for credit losses declined by 9.7% from $1.5 billion in 1Q25 to $1.3 billion, while net charge-offs decreased by 3.0% from $1.5 billion to $1.4 billion. The net charge-off ratio improved by 6 bps to 0.48%, supported by improved consumer credit trends.

• Non-interest expenses increased by 4.3% from $17.8 billion in 1Q25 to $18.5 billion, driven by higher revenue-related incentive expenses and continued investments in technology and personnel. The efficiency ratio improved by approximately 170 bps to 61.0%.

• Group ROE improved to 12.0% (1Q25: 10.4%), while ROTCE increased to 16.0% (1Q25: 14.0%). CET1 ratio declined to 11.2% in 1Q26 (1Q25: 11.8%) but remained comfortably above regulatory minimums. The group returned $9.3 billion to shareholders through dividends and share repurchases.

• Consumer Banking delivered the strongest earnings contribution, with net income increasing 20.9% from $2.5 billion in 1Q25 to $3.1 billion. Global wealth and investment management (GWIM) increased by 32.0% from $1.0 billion to $1.3 billion, Global Banking rose 8.5% from $1.9 billion to $2.1 billion, while Global Markets increased 2.9% from $1.9 billion to $2.0 billion.

Analyst thesis

Our recommendation is based on:

• Diversified earnings base: Bank of America Corp’s (BAC) diversified earnings base across retail banking, wealth management, corporate banking, and capital markets activities enhances earnings resilience and reduces dependence on any single revenue stream. Its scale provides funding advantages through a large, low-cost deposit base, while the breadth of customer relationships supports cross-selling and recurring fee income. This diversification helps support more stable profitability and returns for BAC across economic cycles.

• Supportive operating environment: BAC benefits from a resilient US operating environment, supported by stable labour markets, moderating inflation and still-elevated interest rates, underpinning net interest income (NII), credit demand, and client activity. Structural growth in digital banking, payments and wealth management remains supportive. However, moderating GDP growth, higher funding costs, competitive pressures, and regulatory uncertainty continue to constrain growth prospects.

• Strong capital position and resilient profitability: BAC continues to deliver solid returns, supported by disciplined risk management, operating leverage and a large, diversified deposit franchise. Capital and liquidity levels remain strong, supporting sustainable dividends, share buybacks, and continued investment in technology, digital capabilities and franchise expansion.

• Price aligned with value: BAC currently trades broadly in line with our intrinsic value (IV), suggesting that resilient earnings, balance sheet strength and the medium-term operating outlook are largely reflected in the share price.