BAC's Fee Income to Benefit From Solid Q1 Capital Markets Performance

At the Royal Bank of Canada Global Financial Institutions Conference on Tuesday, Bank of America BAC co-president Dean Athanasia struck an upbeat tone on the company’s capital markets business for the first quarter of 2026. The comments lifted investor sentiment, with BAC shares rising 1.4% by the close and snapping the losing streak from last week.

Athanasia noted that investment banking (IB) fees have grown nearly 10% year over year so far this quarter. In the fourth quarter of 2025, IB fees of $1.67 billion were up marginally year over year as the plunge in equity underwriting income was more than offset by higher advisory revenues and stable debt underwriting income. The Zacks Consensus Estimate for IB fees is pegged at $1.85 billion for the ongoing quarter.

Further, Bank of America’s Global Markets revenues are projected to increase at a low double-digit rate in the first quarter of 2026, driven by elevated volatility and robust client activity. Athanasia said, “We've got, whatever it is, 15, 16 more days left of trading that we'll see where the results go, but a lot of activity.” He cautioned, however, that volatility arising from the conflict in the Middle East could still pressure results by the end of the quarter. Even with this risk, the Global Markets unit is on track to record its 16th consecutive quarter of year-over-year growth in sales and trading revenues. In the previous quarter, BAC generated $4.52 billion in sales and trading revenues, up 10% from a year earlier. The consensus estimate for first-quarter 2026 sales and trading revenues is pegged at $5.32 billion.

Additionally, in wealth management, Athanasia noted that "fees are up double-digits. That's good for the first quarter.” Bank of America’s net interest income is anticipated to increase 7% year over year on the back of decent loan and deposit growth.

With sales and trading, IB and wealth management accounting for more than 50% of Bank of America’s fee income, ongoing momentum in these areas should drive solid growth. The consensus estimate for non-interest income is $14.02 billion, suggesting a rise of 9% from the prior-year quarter.

What Does BAC’s Peers Expect for IB & Trading in Q1?

Like Bank of America, JPMorgan JPM and Citigroup C are expected to witness robust capital markets performance in the first quarter of 2026.

During the February company update, JPMorgan struck a notably constructive tone on deal activity and capital markets momentum. Management expects IB fees to rise in the mid-teen percentage in the first quarter of 2026, potentially trending toward the high teens. In terms of the trading business, JPMorgan projects markets revenues to grow in the mid-teen range as well, supported by elevated volumes during bouts of volatility.

Citigroup, at the Royal Bank of Canada Global Financial Institutions Conference, reiterated its strategic priorities and financial targets, highlighting strong growth opportunities despite persistent geopolitical and macroeconomic uncertainties. Citigroup expects first-quarter 2026 IB fees and markets revenues (equities and fixed income) to grow in the mid-teens year over year, supported by deal-making and equity capital markets activities.

BAC’s Price Performance & Zacks Rank

Shares of Bank of America have lost 11.9% in the past three months compared with the industry’s 9.2% decline.

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Bank of America currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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