Bank of America Q3 2026 Profit Hit by $1.2 Billion Regulatory Charge

Bank of America Corp. (BAC) reported third-quarter 2026 net income of $6.9 billion, or $0.91 per diluted share, as a $1.2 billion regulatory settlement charge weighed on otherwise higher revenue supported by net interest income, loan growth and wealth-management fees. Excluding the non-tax-deductible charge, adjusted net income was $8.1 billion and adjusted diluted earnings per share were $1.08.

The settlement reduced diluted EPS by $0.17 and pushed noninterest expense to $19.7 billion, up $2.4 billion from a year earlier. The charge relates to consent orders announced by the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network concerning aspects of the bank’s U.S. anti-money-laundering, Bank Secrecy Act and economic-sanctions compliance programs.

Revenue, net of interest expense, increased 3% year over year to $30.0 billion, reflecting higher net interest income and asset-management fees, partly offset by lower sales and trading revenue and investment-banking fees. The reported efficiency ratio was 66%, compared with an adjusted 62% excluding the settlement. Return on average common shareholders’ equity was 9.4%, while return on average tangible common shareholders’ equity, a non-GAAP measure, was 12.6%. On an adjusted basis, those returns were 11.1% and 14.9%, respectively.

Lending and net interest income support revenue

Net interest income rose 8% to $16.4 billion, or $16.6 billion on a fully taxable-equivalent basis. Bank of America attributed the increase primarily to higher loan and deposit balances, Global Markets activity and the repricing of fixed-rate assets. Net interest yield increased 15 basis points from a year earlier to 2.16%.

Average loans and leases grew 6% to $1.23 trillion, while period-end loans rose 7% to $1.25 trillion. Commercial lending was a major contributor: average Global Banking loans increased 8%, and average Global Wealth & Investment Management loans advanced 13%. Average Consumer Banking loans were little changed, although average credit-card balances grew 5%.

Average deposits increased 2% to $2.02 trillion, and period-end deposits reached $2.04 trillion, also up 2%. Global Banking average deposits rose 6%, while Consumer Banking deposits were broadly stable.

The company estimated that an instantaneous 100-basis-point parallel increase from the September 30 forward interest-rate curve would add $1.4 billion to net interest income over the following 12 months. A corresponding 100-basis-point decline would reduce net interest income by an estimated $1.9 billion. The analysis assumes no management response and incorporates potential changes in customer deposit behavior.

Consumer and wealth businesses expand

Consumer Banking net income was $3.5 billion, with revenue increasing 4% to $11.6 billion, primarily because of higher net interest income. Combined credit- and debit-card purchase volume rose 8% to $265.7 billion. The unit added more than 200,000 net new checking accounts during the quarter, extending its run of net account growth to 31 consecutive quarters, and opened more than 1 million credit-card accounts across Consumer Banking, Small Business and GWIM.

Consumer investment assets increased 14% to $664 billion, reflecting higher market valuations and $18 billion of net client flows since the third quarter of 2025. Noninterest expense in the segment rose 5% to $5.8 billion, driven by technology and brand investments.

Global Wealth & Investment Management generated net income of $1.5 billion as revenue rose 13% to $7.1 billion. Higher market valuations, asset-under-management flows and net interest income drove the increase. Client balances grew 9% to $5.1 trillion, while AUM increased 12% to $2.4 trillion. The business recorded $20 billion of AUM flows during the quarter and $74 billion since the year-earlier period.

The wealth unit added about 5,000 net new relationships with at least $500,000 across Merrill and Private Bank. Its pretax margin increased to 29% from 27%, even as noninterest expense rose 9%, primarily because of revenue-related incentives.

Capital-markets results remain mixed

Global Banking revenue was broadly unchanged at $6.2 billion. Higher net interest income and a 10% increase in treasury-service charges were offset by lower investment-banking fees. Total company investment-banking fees, excluding self-led transactions, fell 11% to $1.8 billion, although year-to-date fees increased 16% to $5.8 billion. The presentation said investment-banking pipelines remained robust.

Global Markets revenue declined 6% to $5.9 billion, and net income fell to $1.2 billion. Sales and trading revenue decreased 5% to $5.1 billion. Fixed-income, currencies and commodities revenue fell 17% to $2.6 billion, with weakness in mortgages, municipal products and credit. Equities revenue rose 11% to $2.5 billion, supported by client-financing activity in Asia and the United States, marking a record third quarter for the business. Bank of America also reported record year-to-date sales and trading revenue.

Credit remains stable as capital ratio declines sequentially

Provision for credit losses was $1.3 billion, relatively flat from a year earlier and down $0.1 billion from the second quarter. Net charge-offs declined to $1.35 billion from about $1.4 billion in both comparison periods, and the net charge-off ratio improved to 0.44% from 0.47%.

The credit-card charge-off rate was 3.22%, with both the charge-off rate and early- and late-stage delinquencies improving from a year earlier. Commercial criticized utilized exposure fell to $19.9 billion, its lowest rate relative to reservable utilized exposure since the fourth quarter of 2019. Nonperforming loans and leases totaled $5.5 billion, up $0.2 billion year over year but down the same amount sequentially.

Bank of America’s preliminary Common Equity Tier 1 ratio was 10.9%, down 37 basis points from the second quarter but above its regulatory minimum. CET1 capital was $198 billion, while average Global Liquidity Sources totaled $914 billion. The bank repurchased $6.0 billion of common stock and paid $2.2 billion in common dividends during the quarter.

The presentation identified regulatory and litigation exposure, interest-rate fluctuations, inflation, trade and geopolitical uncertainty, potential deterioration in credit conditions, cybersecurity and technology disruptions, and evolving capital and liquidity requirements among its principal risks. The consent orders also leave the bank exposed to execution and reputational risks associated with its compliance programs.