Bank of America Corp (NYSE:BAC) shares fell 4.5% as disappointing guidance overshadowed better-than-expected fourth quarter financial results.
The bank reported Q4 net income of $7.6 billion, up from $6.8 billion a year earlier. Diluted earnings per share rose 18% year-over-year to $0.98, beating analyst expectations of $0.96.
Revenue, net of interest expense, increased 7% to $28.4 billion, also ahead of estimates of $27.6 billion.
Net interest income (NII) grew 10% year-over-year to $15.8 billion, driven by higher balances, fixed-rate asset repricing and stronger Global Markets activity, partly offset by lower interest rates.
Provision for credit losses declined to $1.3 billion from $1.5 billion a year earlier, while net charge-offs also fell.
Despite the quarterly beats, investor focus turned to management’s outlook. Bank of America projected 2026 NII growth of 5% to 7%, citing expected Federal Reserve rate cuts and ongoing deposit migration pressures.
The forecast fell short of some Wall Street expectations for more robust growth following the elevated margins seen earlier in 2025, raising concerns that peak NII may be approaching.
For Q4, noninterest expense rose 4% to $17.4 billion, reflecting higher incentive compensation, transaction costs and continued investments in technology, people and brand. The efficiency ratio improved to 61%, down nearly 200 basis points from a year earlier.
For the full year 2025, Bank of America posted net income of $30.5 billion and earnings per share of $3.81, up 19% year-over-year.
Average deposits grew 3% to $2.01 trillion, marking the tenth consecutive quarter of sequential growth, while average loans and leases increased 8%.
The bank returned $8.4 billion to shareholders during the quarter through dividends and share repurchases and ended the period with a CET1 capital ratio of 11.4%, well above regulatory minimums.
“With solid revenue growth, positive operating leverage, and a lower efficiency ratio, we improved returns year-over-year for both the full year and the quarter,” Bank of America CEO Brian Moynihan said in a statement.
“With consumers and businesses proving resilient, as well as the regulatory environment and tax and trade policies coming into sharper focus, we expect further economic growth in the year ahead.”