To The Moon

$Bank of America(BAC)$ is expected to release its quarterly earnings for fiscal Q1 2025 on 15 April 2025 before the market open.

The revenues consensus estimate are expected to come in at $26.74 billion, which would represent an increase of 3.6% from same period one year ago.

The consensus earnings per share forecast would be expected to come in at 82 cents, which would represent a change of 2.4% compared to same period last year.

Bank of America (BAC) Last Positive Earnings Call Saw Share Price Decline By 23.18%

We saw how BAC share price decline by 23.18% even though we are seeing a positive earnings call on 16 Jan 2025.

The earnings call for Bank of America Q4 2024 was predominantly positive, highlighting strong revenue growth, record sales and trading performance, and consistent deposit and loan growth. However, there were some challenges, such as increased expenses and regulatory compliance issues. Overall, the company is positioned well for growth in 2025.

Bank of America (BAC) Guidance

During Bank of America's Q4 2024 earnings call, the executives provided a comprehensive overview of the company's financial performance and outlook. The bank reported a net income of $6.7 billion, equating to $0.82 in earnings per share (EPS) for the quarter, contributing to a full-year net income of $27.1 billion and an EPS of $3.21. Revenue for the year reached $102 billion, with a return on assets of 83 basis points and a 13% return on tangible common equity. The balance sheet remained robust, ending the year with $953 billion in liquidity and $201 billion in regulatory CET1 capital, resulting in a CET1 ratio of 11.9%. The bank observed growth in net interest income (NII), which increased to $14.5 billion for the quarter on a fully taxable equivalent basis, with expectations to achieve record NII in 2025. Deposit growth continued for the sixth consecutive quarter, while loan demand showed a positive trend. Investment banking fees surged by 44% year-over-year, and sales and trading revenue set a new record, contributing to a full-year total of nearly $19 billion.

The call highlighted the bank's continued focus on responsible growth, digital engagement, and capital returns to shareholders, with $21 billion returned in 2024, including an 8% dividend increase.

Key Factors Influencing BAC Q1 2025 Earnings

Bank of America reported $25.5 billion in revenue for Q4 2024, up 15% year-over-year. Excluding a one-time charge, revenue grew by 8%.

Interest Rate Environment

Net Interest Income (NII): A critical driver for BAC. If the Federal Reserve maintains higher rates through 2024/2025, NII could expand. Conversely, rate cuts might pressure margins. NII increased for the second consecutive quarter, with a Q4 total of $14.5 billion, up from a trough of $13.9 billion in Q2 2024. The bank expects NII to grow 6-7% in 2025.

Yield Curve: A steeper curve (long-term rates > short-term) typically benefits banks’ lending profitability.

Economic Conditions

Loan Demand: Economic growth fuels consumer and business borrowing. A robust economy in early 2025 could boost loan portfolios. Deposits grew for the sixth consecutive quarter, with consumer banking deposits increasing by $4 billion from the third quarter. Loans also showed growth, with commercial loans up 5% year-over-year.

Commercial real estate loans decreased by 8% year-over-year, reflecting challenges in this sector.

Credit Quality: Low unemployment and stable inflation reduce default risks. A downturn could increase provisions for credit losses (PCL), impacting earnings.

Non-Interest Income

Investment Banking/Trading: Market volatility and IPO activity influence fees. A bullish market in 2025 might enhance wealth management and trading revenues. Sales and trading revenue reached a fourth-quarter record of $4.1 billion, marking 11 consecutive quarters of year-over-year growth.

Fee Income: Credit card fees, advisory services, and asset management trends will play a role. Wealth Management added 24,000 new households in 2024, with total client balances reaching $6 trillion. Asset management fees grew by 23% year-over-year.

Expense Management

Operational Efficiency: BAC’s cost-saving initiatives (e.g., digital transformation) could improve profitability. Rising operational costs (wages, tech investments) might offset gains. Noninterest expense rose to $16.8 billion, driven by incentives tied to revenue growth and investments in people, technology, and brand partnerships.

Regulatory and Macro Risks

Capital Requirements: Stricter regulations could limit capital flexibility. The OCC issued a compliance consent order related to enhancing certain deficiencies, leading to increased compliance costs.

Geopolitical Events: Trade policies, geopolitical tensions, or unforeseen crises (e.g., pandemics) may disrupt financial markets.

Bank of America (BAC) Price Target

Based on 18 Wall Street analysts offering 12 month price targets for Bank of America in the last 3 months. The average price target is $50.97 with a high forecast of $59.00 and a low forecast of $43.50. The average price target represents a 41.78% change from the last price of $35.95.

If we looked at how BAC have been performing since the start of 2025, we are seeing some sequential changes in NII, loan growth, and fee segments in 2024 which does have some impact on its previous earnings call in Jan 2025.

So with the earnings release by some of its competitor, $JPMorgan Chase(JPM)$ where strong revenue was reported amid market uncertainty. So if we were to look at the market share, we might see some growth for BAC, if that happen, we could expect a move for its share price back to the lowest price target.

Technical Analysis - Exponential Moving Average (EMA)

If we looked at the technical, we are seeing how BAC is also trading sideways similar to some of its competitors, where JPM had reported strong revenue, but could BAC give us the same strong performance with some of its strategic initiatives where technology investments where digital banking advancements could drive customer engagement and cost savings.

The next area to watch would be its sustainable finance where growth in ESG-linked products might open new revenue streams.

We are seeing BAC trying to come up strong from the RSI oversold region, and if that could gather a strong momentum, we could be seeing a gap up from BAC after its earnings.

Summary

BAC’s earnings will hinge on interest rates, economic resilience, and internal execution. Investors should track Fed policy, economic indicators (GDP, unemployment), and BAC’s quarterly updates leading up to 2025. Performance relative to peers like JPMorgan and Citigroup may highlight BAC’s competitive positioning.

JPM had shown strong revenue amid market uncertainity, so I would be watching how BAC NII would perform, if that can surprise, we could be seeing a nice gap up.

Appreciate if you could share your thoughts in the comment section whether you think BAC could stage an earnings surprise and share price give a gap up.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.