Bank of America Corp. reported a 27% increase in second-quarter fiscal 2026 net income to $9.1 billion, driven by record trading revenue and robust investment banking fees. Earnings per share rose 34% to $1.21, while revenue increased 15% year over year to $31.6 billion. The bank's performance was supported by broad-based growth across all business segments, improved operating leverage, and a resilient US economy. RBC Capital Markets analyst Gerard Cassidy maintained an Outperform rating and raised the price target from $59 to $65, noting that the company's core low-cost deposit base is expected to drive healthy growth over the next 12 months as the yield curve steepens.

Segment Performance

Every business segment contributed to year-over-year growth, with each generating positive operating leverage and improving efficiency ratios. Consumer Banking net income increased 10% to $3.3 billion, while Global Wealth and Investment Management surged 42% to $1.4 billion. Global Banking net income grew 20% to $2.05 billion, and Global Markets net income jumped 70% to $2.7 billion. Average deposits rose 2.5% to $2.02 trillion, marking the 12th consecutive quarter of growth, while average loan and lease balances increased 8% to $1.22 trillion.

Trading and Dealmaking Surge

Sales and trading revenue increased 33% to a record $7.2 billion, with Equities delivering a record $3.6 billion and Fixed Income, Currencies, and Commodities (FICC) generating $3.5 billion, its strongest quarter in over a decade. Investment banking fees jumped 50% to $2.1 billion, reflecting strength in debt underwriting, advisory, and equity underwriting. Management highlighted that an AI-driven capital spending cycle supported equity issuance and M&A activity.

Balance Sheet and Capital Return

The bank’s efficiency ratio improved to 59% from 62.61% a year ago, while return on tangible common equity reached 17%. Its Common Equity Tier 1 (CET1) ratio stood at 11.2%, with Tier 1 common equity growing to nearly $202 billion. Book value per share increased to $39.34. The company returned $8 billion to shareholders through dividends and share repurchases during the quarter. Management noted that credit quality remains stable, with criticized commercial exposures declining by $2.3 billion from the prior quarter. Cassidy expects credit quality results to be "resilient" over the next 12 months, given the de-risking of its balance sheet over the last 15 years.

Keefe, Bruyette & Woods analyst Chris McGratty has maintained an Outperform rating on Bank of America (NYSE: BAC) and raised the price target to $70 from $67. This adjustment signals confidence in the bank's valuation and future performance potential.

Rating and Price Action

The research note reinforces a positive stance on Bank of America. The new price target of $70 represents an increase from the previous target of $67.