Bank of America Corp. (NYSE:BAC) delivered second-quarter fiscal 2025 results that largely surpassed expectations, with reported earnings per share aligning with consensus estimates.

The financial giant showcased resilience through stronger core fees and stable operating efficiency despite slightly lower net interest income (NII). Goldman Sachs views these results as “better than feared.”

Investors are now keenly focused on the bank’s NII outlook for the latter half of 2025, alongside its operating leverage and the sustained performance of its trading revenue, as the institution navigates a dynamic rate and regulatory landscape.

Also Read: Bank of America Q2 Loans And Deposits Grow, Efficiency Ratio Increases To 64.58%

On Wednesday, Goldman Sachs analyst Richard Ramsden reiterated his Buy rating on Bank of America Corp, setting a price forecast of $56.

The analyst noted that downside risks to this outlook include less efficiency improvement from NII attrition and slower repricing of deposits.

Ramsden characterized Bank of America’s second-quarter fiscal 2025 results as slightly better than anticipated. The reported EPS of 89 cents aligned with both his firm’s and consensus estimates, while core EPS came in at 89 cents, just shy of his 91 cents projection.

He highlighted that core pre-provision net revenue (PPNR) of $9.5 billion was largely in line with Street expectations. This was supported by stronger core fees and stable operating efficiency despite slightly lower NII.

Ramsden specifically focused on the NII guidance, which remains at $15.5 to $15.7 billion for fourth-quarter fiscal 2025, despite now factoring in two fewer rate cuts than previously assumed.

The analyst anticipates NII to improve in the second half of 2025, propelled by a significant step-up in asset repricing from $100 million in the second quarter to $225 million per quarter in the third and fourth quarters.

Looking ahead, Ramsden raised his fiscal 2026 NII estimates, supported by an upward revision of loan growth guidance from low to mid-single digits. He observed that deposits were 1% above expectations, and deposit costs saw a marginal one basis point decrease.

Loans, he noted, grew 1% sequentially, with commercial lending up 5% and consumer lending up 1%. Conversely, loan yields declined by 7 basis points (bps), underperforming consensus by 6 bps.

Fee income surpassed consensus by 0.5%, primarily driven by a 15% year-over-year surge in trading revenue, well exceeding the company’s guidance, and stronger-than-expected investment banking fees, Ramsden pointed out. However, he also noted that investment banking revenue still experienced a 7% year-over-year decline.

Ramsden also brought attention to the core efficiency ratio, which at 64.5% was slightly worse than consensus, and core expenses of $17.2 billion, up 5% year-over-year, exceeding the fiscal guidance range. The analyst is now seeking clarification on whether the full-year expense guide remains valid.

Regarding credit quality, Ramsden noted that provisions were 2% below Street expectations, with a $67 million reserve build aligning with forecasts. Net charge-offs increased 5% quarter-over-quarter, coming in 1% above consensus. While he observed no signs of significant credit quality deterioration, he emphasized that he would be closely monitoring the pace of reserve builds.

According to Ramsden, capital return remains a key focus, with Bank of America repurchasing $5.3 billion in stock during the quarter. He noted that the CET1 ratio declined to 11.5%, which nonetheless remains 150 bps above the regulatory minimum. The analyst is seeking further details on how Bank of America plans to deploy capital amidst potential changes to capital requirements.

Overall, Ramsden expects investors to concentrate on the NII trajectory, operating leverage in the second half of 2025, and the sustainability of trading revenue as Bank of America navigates an uncertain rate and regulatory environment.

Price Action: BAC stock is trading lower by 2.31% to $45.06 at last check Wednesday.

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