Bank of America Q2 2026 Earnings: Broad-Based Revenue Growth Lifts Operating Leverage

Bank of America reported a strong second quarter, with revenue up 15%, net income up 27%, and EPS up 34% as net interest income, investment banking, wealth management, and trading all grew. The central investment takeaway is that the bank’s earnings growth was unusually broad-based, while expense growth remained controlled enough to produce 660 basis points of quarterly operating leverage.

The durability of that performance remains the key question. Markets and investment-banking results were particularly strong and face more difficult comparisons in the second half, but management raised its full-year operating-leverage outlook and expects net interest income growth to reach the upper end of its prior range.

As Reported on the Call

The Bigger Story

The quarter showed the earnings power of Bank of America’s diversified model when several revenue engines are working at the same time. Net interest income continued to rise despite a modestly lower short-rate environment, while favorable capital markets supported investment banking, trading, wealth-management fees, and client activity.

That combination allowed revenue to outpace expenses by a wide margin. Management reported 660 basis points of operating leverage in the second quarter and said first-half operating leverage exceeded 450 basis points. It now expects 300 to 400 basis points for the full year, above the 200 to 300 basis points it had described as a more sustainable range at its Investor Day.

The important caveat is that some of the largest gains came from market-sensitive businesses. Equity trading revenue rose 70%, while investment-banking fees rose 50%. Management acknowledged that comparisons become more difficult in the second half because investment banking and net interest income were already stronger in the latter half of 2025. The outlook still calls for a strong second half, but the year-over-year growth rate may moderate even if underlying activity remains healthy.

Revenue and Operating Performance

Revenue of $31.6B increased 15% from a year earlier, with every major business segment contributing to growth. The bank cited net interest income, wealth-management fees, investment banking, and sales and trading as the largest drivers.

Net interest income on a fully taxable equivalent basis reached approximately $16.2B, up $1.3B, or 9%, from the second quarter of 2025. It also increased $253M from the first quarter. Management attributed the increase to higher loan and deposit balances, repricing of fixed-rate assets, and Global Markets-related activity, partly offset by lower average short-term rates.

Average loans and leases rose 8% year over year to $1.2T, extending a multiquarter lending-growth trend. Commercial lending was the largest contributor, with average commercial loans up 11% to $733B. Management said growth had broadened beyond prior Global Markets-related activity and was being generated across business banking, commercial banking, and corporate banking.

Consumer lending grew 3%, led by securities-based lending and credit cards. Credit-card balances rose 4% as Bank of America increased marketing and refreshed product offerings. Management reiterated its objective of returning card growth toward 5%, after growth improved from 1% earlier in the cycle to 4% in the quarter.

Deposit growth remained a significant support for the net interest income outlook. Average deposits increased 2.5% to $2.02T, marking the 12th consecutive quarter of year-over-year average deposit growth. Non-interest-bearing balances increased $19B, or 4%, while Global Banking deposits rose 8%.

Management characterized the lower deposit rate paid as primarily a mix effect, helped by relationship-account growth rather than a reduction in competitive intensity. Consumer deposits carried a rate paid of 48 basis points on $957B of balances. The bank also pointed to 162,000 net new checking accounts and continued growth in operating accounts as indicators of franchise-led deposit gathering.

Profitability and Margins

The headline earnings increase was driven by both revenue growth and operating leverage. Net income rose 27% to $9.1B, while EPS rose 34% to $1.21. Management reported a 17% return on tangible common equity and an efficiency ratio of 59%.

Non-interest expense was approximately $18.6B, up about $1.4B year over year and roughly $100M sequentially. The increase reflected investments in technology, sales teams, financial centers, and marketing, as well as higher activity-related costs in Global Markets. Management noted that some expense growth is directly connected to higher revenue, including brokerage, clearing, exchange, and advisor incentive costs.

The revenue mix mattered. Global Markets generated $7.2B of sales and trading revenue excluding DVA, up 33%, while net income excluding DVA rose 70% to $2.7B. Equities revenue reached a record $3.6B, up 70%, supported by client financing activity and derivatives and cash-equity trading. FICC revenue was $3.5B, its strongest quarter in more than a decade.

Wealth management also provided high-margin growth. Global Wealth and Investment Management revenue rose 16% to a record $6.9B, and segment net income rose 42% to $1.4B. Pre-tax margin exceeded 27%, aided by higher asset-management fees, positive client flows, market appreciation, and higher net interest income.

Demand, Customers and Pricing

Consumer spending and commercial activity remained constructive, according to management. The company said customer spending was running at more than 6% year-over-year during the second quarter, compared with 5% growth for the first half. Consumer card spending rose 9% to $266B.

In wealth management, client balances reached a record $4.9T, up 12% year over year. Assets under management increased 17% to $2.3T, supported by approximately $14B of quarterly AUM flows and $78B over the last four quarters. The segment added 6,000 net new affluent households during the quarter.

Management described investment-banking pipelines as healthy and said client activity remained broad across debt underwriting, advisory, equity underwriting, strategic transactions, and liquidity management. Those trends supported more than $2.1B in investment-banking fees, excluding self-led transactions.

Credit remained stable. Provision expense and net charge-offs were each approximately $1.4B, largely unchanged from the first quarter. Consumer card delinquencies and charge-offs improved both year over year and sequentially. In commercial credit, improved commercial real estate performance offset isolated corporate and commercial lending losses. Reservable criticized commercial exposures declined by about $2.3B sequentially to roughly $22B.

What is Bank of America’s guidance and outlook?

Management now expects full-year 2026 net interest income growth at the upper end of its prior 6% to 8% range. The outlook assumes modest loan and deposit growth in the second half, continued fixed-rate asset repricing, balance-sheet optimization, and the current forward curve, which includes one 25-basis-point rate increase in September.

Bank of America remains asset-sensitive in its banking book. Management said a 100-basis-point parallel increase above the forward curve would increase net interest income by $1B over the next 12 months on a dynamic deposit basis. It also said Global Markets is somewhat liability-sensitive, creating a modest offset to the banking-book benefit from higher rates.

The company raised its full-year operating-leverage outlook to 300 to 400 basis points from prior expectations of more than 200 basis points. Management cautioned that stronger second-half 2025 results create harder comparisons, particularly for net interest income and investment-banking revenue.

Longer term, management reiterated confidence that net interest yield can move toward 2.30%, versus 2.08% in the second quarter. That improvement is expected to come partly from reducing lower-returning funding and balance-sheet items, including repo and institutional CDs, rather than from a major change in core loan or deposit growth.

Balance Sheet, Cash Flow and Capital

Ending assets were stable sequentially at $3.5T. Lower securities balances were replaced by loan growth and Global Markets activity.

The CET1 ratio was 11.2%, above the bank’s stated 10% minimum requirement. CET1 capital was nearly $202B, while risk-weighted assets increased to $1.8T due to loan growth and capital-markets activity.

Management said the bank has approximately $800B of cash and securities in excess of loans, giving it flexibility to pursue core loan and deposit growth without being funding constrained. It also expects continued balance-sheet optimization in the second half, including reductions in repo and institutional CDs that management believes should support net interest yield, capital efficiency, and returns.

The bank returned $8B to shareholders through dividends and share repurchases during the quarter.

What Investors Should Watch

1. Net Interest Income Growth in the Second Half

Management expects full-year NII growth near the upper end of 6% to 8%, but the second half faces tougher comparisons. Loan and deposit growth, asset repricing, and the path of interest rates will determine whether NII continues to compound at a high rate.

2. Durability of Markets and Investment-Banking Revenue

Trading and investment banking made an outsized contribution to quarterly earnings. Investors should watch whether client activity, capital-markets pipelines, and market conditions can sustain revenue near current levels as comparisons become more demanding.

3. Commercial Loan Growth Beyond AI-Related Financing

Commercial loans grew 11%, and management said growth is broadening across client categories. Continued growth outside of large technology and AI-related financing would support the view that business demand is strengthening more broadly.

4. Expense Discipline as Revenue Mix Changes

Management has avoided formal expense guidance because activity-driven costs move with markets and wealth revenue. The key measure is whether the company can sustain positive operating leverage while continuing to invest in technology, AI, marketing, financial centers, and sales capacity.

5. Credit Performance and Commercial Real Estate

Credit costs remained stable and criticized commercial exposures declined. Continued improvement in commercial real estate and stable consumer card losses would reinforce management’s view that underwriting remains disciplined, while any deterioration in corporate or commercial losses would challenge that assessment.

AlgovestIQ Takeaway

Bank of America’s second quarter was stronger than a typical bank earnings report because revenue growth came from several sources at once. Core balance-sheet growth lifted net interest income, wealth-management fees benefited from client flows and market levels, and capital-markets businesses produced exceptional results. The bank also converted that revenue into higher earnings efficiently, with EPS rising 34% and the efficiency ratio improving to 59%.

The most notable change in the investment case is the higher operating-leverage outlook. Management now expects 300 to 400 basis points for 2026, supported by first-half performance that exceeded 450 basis points. That suggests the bank is seeing more incremental earnings benefit from its scale than it had previously embedded in its near-term outlook.

Still, investors should separate structural progress from favorable market conditions. Deposit and loan growth, fixed-rate asset repricing, and wealth-management flows support a durable earnings case. By contrast, the magnitude of the quarter’s investment-banking and equity-trading gains may be harder to sustain, particularly as second-half comparisons become more challenging.

The central question is whether Bank of America can maintain strong revenue growth while keeping expense growth proportionate and credit losses contained. Evidence of continuing commercial loan growth, stable deposit pricing, further net interest yield improvement, and resilient credit metrics would strengthen that case. A material slowdown in capital-markets activity, weaker consumer or commercial credit, or expenses rising faster than revenue would weaken the operating-leverage narrative.