Shares of Bank of America Corp (NYSE:BAC) rose in early trading on Wednesday, after the release of fiscal second-quarter results.
The company’s core low-cost deposit base is expected to drive healthy growth over the next 12-months as the yield curve steepens, according to RBC Capital Markets.
The Bank of America Analyst: Analyst Gerard Cassidy maintained an Outperform rating, while raising the price target from $59 to $65.
The Bank of America Thesis: The companyreported record earnings for the quarter, with 15% revenue growth on broad-based strength, Cassidy said in the note.
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He highted the following from Bank of America’s results:
- Total revenue was up $4.1 billion year-on-year, at $31.6 billion.
- Net income grew 27% year-on-year to $9.1 billion.
- Diluted earnings grew 34% year-on-year to $1.21 per share.
Growth was broad-based, the analyst stated, noting that every business segment generated double-digit net income growth:
- Consumer Banking: 10%
- Global Banking: 20%
- Global Wealth & Investment Management: 42%
- Global Markets: 72%
Bank of America’s net interest income grew 9% to $16.0 billion, driven by Global Markets activity, higher loan/deposit balances, and fixed-rate asset repricing, while noninterest income climbed 22% and asset management fees rose 20%, Cassidy said.
Equities was the standout business in the first half of the year, surging 70% to $3.6 billion on strong derivatives and cash performance, especially in the US and Asia, the analyst stated.
Both credit quality and credit card delinquency rates improved during the first half of 2026, he added.
Bank of America’s business model is aligned to grow with the US economy, Cassidy said. "Its core low-cost deposit base is its strongest asset, and we expect it to shine over the next 12-months as the yield curve steepens," the analyst wrote.
He expects Bank of America’s credit quality results to be "resilient" over the next 12 months, "given the de-risking of its balance sheet over the last 15 years."
BAC Price Action: Shares of Bank of America had risen by 1.67% to $12.52 at the time of publication on Wednesday.
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