Before the opening bell on Tuesday, Bank of America (BAC), the second-biggest bank in the United States, will release its 2025 Q1 earnings report.
Analysts are projecting a mixed performance. Economic uncertainty caused by trade tariffs and market volatility at the same time of the report has put pressure particularly on bank stocks.
Earnings Outlook and Consensus Estimates
- Earnings Per Share: $0.81
- Revenue: $26.74 Billion
The EPS forecast is a 2.4% decline from the same period last year. Revenues, however, are expected to increase 3.6% from the same quarter a year ago.
Net interest income (NII) is expected to come in at $14.42 billion, up 2.8% from last year, reflecting stable interest rates between 4.25% and 4.5% set by the Federal Reserve. ⁽¹⁾
With an average 5.8% increase in earnings over the last four quarters, BAC has a solid track record. The bank’s stock could gain traction if it surpasses forecasts once more.
However, a weak report might further weaken the stock, which has lost more than 20% so far this year. ⁽²⁾
Key Factors Driving Performance
The outcome of Bank of America’s report will be impacted by various factors.
Stable interest rates and stabilizing deposit costs are expected to boost net interest income (NII). However, according to Federal Reserve data, loan demand has remained low, with very modest growth in consumer, real estate, and commercial loans. This could limit NII gains. ⁽³⁾
Investment banking (IB) fees are another focus. Global mergers and acquisitions (M&As) grew slightly in Q1, mostly in Asia, but US activity weakened due to market volatility from Trump’s tariff plans.
Advisory fees may see a modest rise, while underwriting fees—about 40% of IB revenue—are also expected to grow only slightly due to a quiet IPO market and subdued bond issuance. Economic uncertainty has made companies hesitant to pursue big deals, despite a business-friendly outlook earlier in the year. ⁽⁴⁾
Economic Pressures and Tariff Impact
Markets have been rattled, and inflation concerns have increased because of Trump’s new tariff initiatives, which include a 145% duty on Chinese goods. On March 19, Brian Moynihan, CEO of Bank of America, said that American consumers are still spending 6% more than they did the previous year, which is encouraging.
However, he also highlighted growing pessimism among consumers and small businesses. BAC economists predict US GDP growth to slow to 2% in 2025, with tariffs cutting about 40 basis points off that figure. ⁽⁵⁾
Although Q1 results should still appear stable since the quarter concluded prior to the market decline in April, higher inflation and postponed rate reduction could put pressure on BAC’s profits later this year.
Wealth management fees and other noninterest income might provide some assistance. After adjustments, it increased by 15% year over year to $11 billion in Q4 2024, and it may profit from clients seeking guidance in the face of uncertainty. ⁽⁶⁾
Looking Ahead
Bank of America’s Q1 earnings will test the company’s resilience against economic uncertainties. A strong report may not result in a substantial recovery if not accompanied by solid investor optimism.
The bank has ambitious long-term goals, including opening 165 new branches by 2026 and spending $4 billion on technology this year.
Risks remain high due to short-term challenges including tariffs, inflation, and unstable markets. For the time being, BAC has a crucial opportunity to demonstrate its resilience. ⁽⁷⁾
