To The Moon

$Bank of America(BAC)$ is set to release its fiscal Q2 2025 earnings on Wednesday, July 16, 2025, before the market opens.

EPS: Analysts expect BAC to report EPS of approximately $0.86 to $0.87, representing a year-over-year increase of 3.6% to 4.8%. There has been a slight upward revision of 0.53% to 0.8% in the consensus EPS estimate over the last 30 days.

Revenues: Projected revenues are around $26.61 billion to $26.77 billion, indicating a year-over-year increase of 4.9% to 5.5%.

Bank of America (BAC) Fiscal Q1 2025 Earnings Summary

Bank of America delivered a strong performance in Q1 2025, with net income and diluted EPS showing good growth both quarter-over-quarter and year-over-year.

Net Income: The company generated $7.4 billion in net income.

Diluted Earnings Per Share (EPS): BAC reported $0.90 per diluted share, surpassing analyst expectations of around $0.81.

Revenue: Revenue (excluding DVA) improved by 10% from Q1 2024, driven by solid sales and trading results, along with other income from leveraged finance positions. Total revenue, net of interest expense, was $27.4 billion.

Global Markets: The company saw significant pickups in customer activity in Global Markets, indicating a constructive environment for its trading operations.

Deposits: Despite some market volatility, there was no major deposit flight to safety, and the company continued to drive daily deposit growth. Average deposit balances included $1,410.7 billion in interest-bearing and $513.4 billion in non-interest-bearing deposits.

Net Interest Margin (NIM): The NIM in Q1 2025 was flat compared to Q4 2024 levels, falling within the 2.05% to 2.10% range.

"All Other Fee Line": This line item was close to breakeven, impacted by tax credit activity, gains from leveraged finance positions, a legal settlement, and Visa B cleanup.

Management also discussed the bank's stress test disclosures, emphasizing its strong position to withstand potential economic downturns and the potential for reduced regulatory burden and operational costs under the new administration.

Factors and Metrics to Watch for Bank of America (BAC) Fiscal Q2 2025 Earnings

Bank of America's Q2 2025 performance will likely be shaped by a combination of interest rate dynamics, economic activity, and capital markets performance. Investors should pay close attention to the following:

Key Analyst Estimates (Consensus):

1. Net Interest Income (NII) and Net Interest Margin (NIM):

Interest Rate Environment: While the Federal Reserve's rate path has been a key driver, the market is now more focused on how changes in market rates affect the bank's asset-sensitive balance sheet. Citi has indicated that Bank of America may face challenges in sequentially growing its net interest income due to lower yields impacting its asset-sensitive balance sheet while deposit rates remain high.

Loan Growth: Investors will be keen on an update regarding loan growth across various segments (consumer, commercial, real estate). The consensus among analysts points to a modest increase in total earning assets.

Deposit Trends: Watch for changes in deposit balances, particularly the mix between interest-bearing and non-interest-bearing deposits. An increase in non-interest-bearing deposits can be beneficial for NII. Bank of America's ability to retain and grow its deposit base will be crucial.

2. Capital Markets Performance (Trading & Investment Banking):

Trading Revenues: Trading is expected to be a positive driver for major U.S. banks in Q2. Consensus estimates suggest trading revenues for the largest Wall Street lenders could accelerate nearly 10% year-over-year. BAC's equity and fixed-income trading performance will be critical.

Investment Banking (IB) Fees: This segment remains a watchpoint. While there's some optimism about pipelines building, the bank had indicated that IB revenue could fall by as much as 25% in Q2 due to slowed deal-making from policy uncertainty related to tariffs. Overall, investment banking revenues at the top five banks are anticipated to retreat 10% year-over-year, underscoring a muted deal-making and equity capital markets landscape. Investors will look for signs of a turnaround or stabilization.

3. Asset Quality and Credit Trends:

Loan Loss Provisions: Watch for any changes in the bank's provisions for credit losses. While the consumer has generally remained resilient, any signs of deterioration in loan portfolios (e.g., commercial real estate, credit cards) could lead to higher provisions.

Non-Performing Loans (NPLs): Analysts project total non-performing loans, leases, and foreclosed properties to increase, with a consensus estimate of $6.66 billion for total non-performing loans, up from $5.47 billion in the year-ago quarter. Monitoring this trend will be important.

4. Expenses and Efficiency:

Operating Expenses: Management's commentary on expense control will be important. While banks are always looking to optimize costs, ongoing investments in technology and digital capabilities can lead to higher expenses.

Efficiency Ratio: The consensus among analysts is that Bank of America's efficiency ratio (FTE basis) will reach 64.5% in Q2, compared to 63.9% in the prior year. Lowering this ratio typically indicates better operational efficiency.

5. Capital Management:

Capital Ratios: Investors will monitor capital ratios (e.g., CET1 ratio, Tier 1 Capital Ratio, Tier 1 Leverage Ratio) to ensure the bank maintains strong buffers against potential economic shocks and continues to comply with regulatory requirements. Analysts project a Tier 1 Capital Ratio of 13.0% (down from 13.5% Y/Y) and a Tier 1 Leverage Ratio of 6.8% (down from 7.0% Y/Y).

Share Buybacks and Dividends: Any updates on share repurchase programs or dividend policy will be closely watched, as these reflect the bank's capital strength and commitment to shareholder returns.

Bank of America (BAC) Price Target

Based on 24 analysts from Tiger Brokers offering 12 month price targets for Bank of America in the last 3 months. The average price target is $50.96 with a high forecast of $59.00 and a low forecast of $33.90. The average price target represents a 8.27% change from the last price of $46.73.

Technical Analysis - Exponential Moving Average (EMA)

Though BAC is in positive momentum with sideway trading, market is expecting stronger NII which would help to drive BAC continued revenue and EPS growth, but we need to be aware of the CPI and also rate cut decisions coming up.

So this might be why the BAC share is trading sideway and into a consolidation, though the bulls are in control, but the attempt to make a continuation for the daily uptrend might be tough.

I hold BAC shares, so will be monitoring whether if there is any slight pullback today (15 Jul), I might plan to add some more.

Summary

For Q2 2025, Bank of America is expected to show continued revenue and EPS growth, largely driven by NII and trading activities. However, the performance of its investment banking division and ongoing asset quality trends will be key areas for investors to scrutinize. Management's outlook on the broader economic environment and its impact on banking operations will also provide crucial insights.

Appreciate if you could share your thoughts in the comment section whether you think BAC could provide an earnings surprise with stronger NII driving continued revenue and EPS growth.

@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.