Bank of America Smashes Q3 Expectations as Profit Soars and Shares Eye Record Highs

Bank of America delivered a robust third-quarter performance that exceeded Wall Street expectations on both the top and bottom line, signaling continued resilience across its consumer and institutional businesses. The Charlotte-based lender reported net income of $8.5 billion, or $1.06 per share, up from $6.9 billion, or $0.81 per share, a year ago and above the $0.95 consensus estimate. Total revenue rose to $28.1 billion, up 11% year-over-year and 6% sequentially, driven by strong net interest income (NII) and a rebound in capital markets activity. Shares rose roughly 4% in premarket trading, setting up a possible test of the all-time high at $52.88 as investors digested signs of earnings momentum heading into year-end.

The quarter was defined by strength in net interest income and an improvement in trading and advisory activity. NII came in at $15.23 billion, slightly above the $15.03 billion forecast, and marked a 9% year-over-year gain to a record level on a fully taxable-equivalent basis. The bank benefited from higher asset yields and expanding loan and deposit balances, though the net interest margin (NIM) remained under mild pressure due to competition for deposits. Noninterest income also improved, climbing on better-than-expected trading results—$5.35 billion excluding debt valuation adjustments (DVA) compared to the $5.01 billion estimate—as client activity and corporate demand rebounded in both fixed income and equities. Expenses were well-contained, with efficiency improving quarter-over-quarter, as management continued to leverage digital adoption to drive productivity gains.

Loan growth remained steady, reflecting broad-based participation across consumer and commercial portfolios. Average loans rose to $320 billion, supported by modest growth in commercial credit and healthy consumer lending trends. Bank of America’s CFO Alastair Borthwick noted that commercial credit “continues to do reasonably well” and pointed to strong demand in asset-backed financing, including the syndicated First Brands loan, where BofA was a lead participant. On the consumer side, performance remained particularly strong in credit cards, which saw rising balances and healthy payment rates. Card spending reached $245 billion, up 6% year-over-year, signaling that consumers remain active despite broader economic uncertainty. The bank’s CFO said consumer card performance “is quite good,” emphasizing that underlying trends in repayment and utilization remain healthy.

Credit metrics showed continued improvement across the portfolio, underscoring disciplined underwriting and a stabilizing economy. The provision for credit losses fell to $1.3 billion, down from $1.6 billion in Q2 and $1.5 billion a year earlier, while net charge-offs declined to $1.37 billion from $1.53 billion last quarter. Consumer charge-offs totaled $978 million, down from $1.08 billion, as delinquencies stabilized and card losses declined. Commercial charge-offs decreased to $389 million, reflecting fewer real estate-related impairments. The overall net charge-off ratio improved to 0.47% from 0.55%, while the allowance for loan and lease losses remained steady at $13.3 billion, or 1.14% of total loans. Including unfunded commitments, total reserves stood at $14.4 billion. Nonperforming loans decreased to $5.35 billion from $5.98 billion in Q2, highlighting improved credit quality and fewer problem assets.

At the segment level, Consumer Banking once again anchored the results, generating $11.17 billion in revenue, up from $10.81 billion in the prior quarter. Average deposits were stable at $947 billion, while loan volumes grew modestly. Net income climbed to $3.44 billion from $2.97 billion in Q2, driven by lower credit losses and cost discipline, as the efficiency ratio improved to 50%. Mobile engagement continued to expand, with 41.3 million active users, reflecting BofA’s growing digital ecosystem. The Global Banking and Markets division turned in one of its strongest quarters of the year, with total revenue up 11% year-over-year to $6.2 billion. Trading revenue rose across asset classes—FICC gained 5% to $3.1 billion and equities surged 14% to $2.3 billion—while investment banking fees improved to $800 million from $700 million in Q2 amid recovering deal activity. Net income for the unit was $1.65 billion, with a 63% efficiency ratio and a 13% return on average allocated capital.

Profitability and capital metrics remained robust. Return on average common shareholders’ equity (ROE) reached 11.5%, while return on tangible common equity (ROTCE) improved to 15.4%. Tangible book value per share rose to $28.39 from $27.71 in Q2, and the common equity tier 1 (CET1) ratio strengthened to 11.6%. Pretax income rose 23% quarter-over-quarter to $9.5 billion, reflecting both revenue growth and cost efficiency. Liquidity remained ample, with $961 billion in global liquidity sources, while book value per share climbed to $37.95.

CEO Brian Moynihan described the results as evidence of the bank’s “balanced and diversified model,” which he said “continues to deliver across all lines of business.” He pointed to “strong consumer activity, disciplined cost management, and robust credit quality” as key strengths, while emphasizing that ongoing investment in technology and digital capabilities is helping drive long-term efficiency and engagement. Moynihan also highlighted that both consumers and businesses remain resilient: “Our clients continue to spend, invest, and borrow responsibly, and that’s a good sign for the broader economy.”

Looking ahead, management struck a confident tone. The bank raised the low end of guidance for net interest income, now expecting Q4 NII of $15.6–$15.7 billion—up from a prior range of $15.5–$15.7 billion—reflecting stronger loan growth and healthy deposit dynamics. Executives also expect continued positive operating leverage into the fourth quarter and disciplined capital deployment through both dividends and buybacks. While management acknowledged that loan growth has normalized from earlier in the cycle, they see stable demand across both consumer and commercial clients, with particular strength in prime financing and investment-grade credit.

In summary, Bank of America’s third-quarter results showcased a franchise firing on all cylinders: revenues and profits beating estimates, credit costs easing, and capital markets activity rebounding. Consumers remain solid, spending trends are healthy, and balance sheet quality remains among the strongest in the sector. With shares climbing 4% and eyeing a breakout above the record $52.88 level, investors appear to be betting that BAC’s combination of stable NII, prudent risk management, and broad earnings diversification will sustain its momentum into 2026.