BAC's Q4 Earnings Top as Trading & NII Shine, Stock Slides on Weak IB

Core Insights - Bank of America (BAC) reported fourth-quarter 2025 earnings of $0.98 per share, exceeding the Zacks Consensus Estimate of $0.95, with an 18% year-over-year growth in earnings [1][9] - The stock experienced a decline of over 2% in pre-market trading due to weak investment banking performance [1] Group 1: Financial Performance - BAC's net revenues reached $28.37 billion, surpassing the Zacks Consensus Estimate of $27.49 billion, marking an 8% increase from the prior-year quarter [6] - Net interest income (NII) grew 10% year over year to $15.92 billion, driven by higher interest income and increased loan balances [6][9] - Non-interest income rose 4% to $12.62 billion, attributed to higher fees and commissions [6] Group 2: Investment Banking Performance - Investment banking (IB) fees in the Global Banking division totaled $973 million, reflecting a 1% decline year over year [3] - Equity underwriting income saw a significant drop of 26%, while debt underwriting income remained stable [3] - Advisory revenues increased by 5% [3] Group 3: Trading and Advisory Performance - Trading revenues, excluding net DVA, grew 10% year over year to $4.53 billion, marking the 15th consecutive quarter of improvement [2] - Fixed-income trading fees increased by 1%, while equity trading income surged by 23% [2] Group 4: Expenses and Efficiency - Non-interest expenses rose by 4% to $17.44 billion, with increases across all cost components except professional fees [7] - The efficiency ratio improved to 61.11%, down from 63.04% in the previous year, indicating enhanced profitability [7] Group 5: Credit Quality - Provision for credit losses decreased by 10% year over year to $1.31 billion [8] - Net charge-offs declined by 12% to $1.29 billion, with non-performing loans and leases as a percentage of total loans at 0.49%, down 6 basis points from the prior year [8] Group 6: Capital Position and Share Repurchase - Book value per share increased to $38.44 from $36.147 a year ago, while tangible book value per share rose to $28.73 from $26.37 [10] - The company repurchased shares worth $6.3 billion during the reported quarter [11]