Can Bank of America Keep Its Winning Streak Going? What 2026 Holds for BAC Stock

Bank of America’s 2025 performance turned heads in the banking sector. With a 24.1% rally, BAC beat the broader market, though it lagged some heavy hitters in the space—JPMorgan surged 34.4% and Citigroup exploded 65.7%. Now comes the harder question: can the momentum last?

The Interest Rate Puzzle: Why NII Matters for Banking Returns

Here’s something most casual investors miss: net interest income (NII) is the heartbeat of any bank’s profitability. Think of it as the spread banks pocket from lending money at higher rates than they pay depositors. When the Fed cuts rates (as it did three times in 2025, bringing them down to 3.5%-3.75%), that spread typically shrinks—bad news for NII growth.

But Bank of America isn’t sitting idle. The company is betting on fixed-rate asset repricing, growing loan and deposit books, and declining funding costs to cushion the blow. Management is targeting a solid 5-7% year-over-year NII bump for 2026, which would be respectable given the macro headwinds. Over the medium term, BAC projects loans and deposits will grow at a CAGR of 5% and 4%, respectively.

Compare this to peers: JPMorgan expects 2025 NII of $95.8 billion (up 3%+ YoY), while Citigroup targets 5.5% NII growth excluding Markets. As rates potentially stabilize rather than plummet further, all three banking giants should navigate 2026 without major NII collapses.

Branch Expansion in the Digital Age: Why Physical Presence Still Wins

It might seem counterintuitive, but Bank of America is betting big on opening new financial centers—not shutting them down. The bank operates 3,650 branches nationwide and has opened 300 new locations since 2019, with 100+ renovations. Since 2014, it’s entered 18 new markets and plans six more through 2028.

Why? Because deposits follow people. BAC’s expansion strategy has already added $18 billion in incremental deposits in newer markets. The combination of local branch presence and digital convenience—the dual-channel approach—is proving a competitive moat. This blend of in-person expertise and app-based convenience positions the bank to capture market share in an era where customers want both worlds.

A Fortress on the Balance Sheet

Liquidity remains rock solid. As of September 2025, BAC’s global liquidity sources averaged $961 billion. The company carries investment-grade ratings from Moody’s (A1), S&P Global (A-), and Fitch (AA-), with stable outlooks. Translation: easy and cheap access to debt markets.

Shareholder returns are flowing generously. BAC raised its dividend 8% to 28 cents per share post-stress test, extending a five-year track record of 8.83% annualized dividend growth. The bank also just greenlit a $40 billion buyback program, targeting $4.5 billion per quarter. JPMorgan and Citigroup are playing similar games—both passing stress tests and hiking dividends 7%.

The Investment Banking Bounce-Back

Deal activity cratered in 2022-2023, decimating IB revenue. But 2024 saw a rebound, and despite some Trump-tariff choppiness in early 2025, deal momentum has returned. BAC expects a 4% year-over-year uptick in IB fees for 2025 and targets mid-single-digit CAGR over the medium term with 50-100 bps of market share gains.

Management plans to deepen corporate-IB integration, expand middle-market coverage, and chase larger deals using AI-enabled insights and alternative investment solutions. With global reach across 87 jurisdictions, the bank is well-positioned to capitalize on the next M&A cycle.

Asset Quality: The Real Headwind

Here’s where caution is warranted. Bank of America’s loan loss provisions have been rising sharply—up 115.4% in 2022, 72.8% in 2023, and 32.5% in 2024. Net charge-offs followed suit, climbing 74.9% and 58.8% in 2023-2024 respectively. The trend continued into early 2025.

Why? Higher rates have stressed borrower credit profiles, and tariff-driven inflation is complicating repayment capacity. As long as rates stay elevated and inflation persists, BAC’s asset quality will remain under pressure. This is the X-factor that could crimp earnings upside in 2026.

The Numbers: Fair Value or Bargain?

Zacks consensus estimates peg BAC’s 2025 earnings at $3.80 and 2026 at $4.33, implying 15.9% and 14% growth respectively. The stock trades at a 12-month trailing price-to-tangible book (P/TB) ratio of 2.01X, below the industry average of 3.18X. Translation: BAC is trading at a discount.

Stack it up against peers: JPMorgan’s P/TB sits at 3.23X (pricier), while Citigroup’s is 1.27X (cheaper). For value hunters, BAC occupies a sweet spot—discounted relative to the sector, yet not as beaten down as Citigroup.

The Bottom Line: Hold, Don’t Chase

Bank of America ticks many boxes heading into 2026. Repricing of fixed-rate assets should support NII, lending tailwinds should kick in as capital rules ease, and the branch expansion strategy continues adding deposits. The IB cycle is improving, and shareholder returns remain generous.

Yet caution is warranted. Asset quality deterioration, tariff uncertainty, and the unclear path for interest rates make near-term timing risky. Current investors should hold for the multi-year story. New buyers should wait for more macro clarity before deploying capital.

BAC’s setup favors patient, long-term holders. Just don’t expect a repeat of 2025’s 24% surge—at least not immediately.