Bank of America Corporation (BAC) reported strong fourth-quarter earnings for 2025, surpassing analyst estimates. Diluted earnings per share rose 18% year-over-year to $0.98, beating the consensus range of $0.95-$0.98. Revenue increased 7% to $28.4 billion, also above expectations of $27.3-$27.8 billion.
The bank's performance was driven by robust growth in its consumer banking and wealth management divisions. The consumer banking unit generated $11.2 billion in revenue, with average deposits rising to $945 billion and digital sales channels accounting for 69% of total sales. The Global Wealth and Investment Management unit saw a 10% revenue increase, with client balances growing 12% to $4.8 trillion. Net interest income, a key profitability metric, grew 10% to $15.8 billion, supported by loan growth and assets repricing at higher yields.
Despite the positive results, BAC stock fell nearly 4% in early trading following the report. Investors shifted focus to several significant risks that could impact future performance. These include weakening investment banking fees, particularly a roughly 20% plunge in equity underwriting, and uncertainty surrounding potential Federal Reserve interest rate cuts in 2026, which could pressure net interest income growth.
The most immediate concern is a proposed regulatory change from the Trump administration: a 10% cap on credit card interest rates, set to take effect on January 20, 2026. With average credit card rates currently around 21%, this cap would drastically cut a major profit center for banks. Bank executives have warned it could severely restrict credit availability, potentially cutting off lending to 82-88% of subprime borrowers.
