Bank of America Earnings: 2025 Outlook Confirms Our NII Thesis Is Playing Out

Key Morningstar Metrics for Bank of America

• Fair Value Estimate: $39.50
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of Bank of America’s Earnings

Bank of America BAC ended 2024 with decent numbers, including fourth-quarter earnings per share of $0.82, equating to a 12.6% annualized return on tangible common equity. 2025 guidance was mixed, as net interest income is expected to expand considerably but expense growth is on the higher side.

Why it matters: The bank’s results were boosted by a net interest income beat in the quarter and decent fee momentum across asset management and investment banking. Upbeat NII guidance for 2025 was the biggest highlight for the quarter.

• Net interest income expanded 2.8% on a sequential basis on the back of deposit favorability, higher loan balances, and fixed-rate asset repricing. Management expects NII to grow to $15.5 billion-$15.7 billion by the fourth quarter of 2025, implying a growth rate of 8.7% compared with the current level.
• 2025 expenses are expected to be 2%-3% higher than in 2024. The midpoint of expense guidance is slightly higher than our 1.9% projection. 2025 charge-offs are expected to be 50-60 basis points, as management expects the economy to remain strong.

The bottom line: We plan to maintain our fair value estimate of $39.50 per share after incorporating fourth-quarter results.

• 2025 NII guidance was encouraging, and we expect returns for the bank to improve in the coming years, but management should probably consider tightening its belt when it comes to spending plans.
• The bank’s fundamental performance and earnings growth trajectory should be better than peers’ in 2025.

Long view: We have continuously highlighted that Bank of America is underearning its true NII potential because of unique balance sheet dynamics. Management’s 2025 guidance has confirmed our thesis on net interest margin expansion.

• NIM expansion and NII growth could lead to a material improvement in the bank’s profitability in the medium term. Profitability could surprise on the upside in 2026.