Bank of America posts $7.1bn profit in 2Q25 as net interest income grows 7% despite softer investment banking fees

How did Bank of America achieve higher net interest income and deposit growth in 2Q25 while facing weaker investment banking revenues?

Bank of America Corporation (NYSE: BAC) reported a net income of $7.1 billion for the second quarter of 2025, translating to earnings per diluted share of $0.89. This represents a three percent year-on-year increase from $6.9 billion, supported by a seven percent jump in net interest income to $14.7 billion. Total revenue, net of interest expense, rose four percent year-on-year to $26.5 billion, even as investment banking fees declined nine percent compared to the year-ago quarter. The financial results highlight strong consumer and markets activity, a resilient balance sheet, and continued momentum in digital banking, although institutional investors remain watchful of soft corporate finance activity and the bank’s narrowing capital ratios.

What drove Bank of America’s 7% net interest income growth despite interest rate headwinds?

The American banking giant recorded its fourth consecutive quarter of sequential net interest income (NII) growth, with NII reaching $14.7 billion on a GAAP basis and $14.8 billion on a fully taxable equivalent basis. Management attributed this growth to higher deposit and loan balances, fixed-rate asset repricing, and stronger NII from Global Markets activity, partially offset by the impact of lower interest rates in non-U.S. markets. Average deposit balances rose three percent sequentially to $1.97 trillion, marking the eighth consecutive quarter of growth. Average loans and leases climbed seven percent year-on-year to $1.13 trillion, supported by broad-based demand across consumer, wealth management, and commercial banking segments.

Analysts viewed this NII performance as evidence of the bank’s strong deposit franchise and pricing discipline. They noted that the blended cash and securities yield of 3.23 percent remained comfortably ahead of the total deposit rate paid, which stood at 1.76 percent, highlighting the bank’s ability to sustain its net interest margin even as competitive deposit pricing pressures emerge.

How did the consumer banking segment maintain strong profitability and digital engagement?

The consumer banking business delivered net income of $3.0 billion, up 15 percent sequentially, while revenue grew six percent year-on-year to $10.8 billion, driven by higher net interest income. Average consumer deposits reached $952 billion, modestly higher than the prior year, with 58 percent held in checking accounts. Combined credit and debit card spend increased four percent to $244 billion, reflecting resilient consumer spending. Consumer investment assets jumped 13 percent to $540 billion, driven by higher market valuations and $19 billion in net client flows.

Digital adoption continued to rise, with 49 million active digital banking users and 4.1 billion logins in the quarter, up 18 percent year-on-year. Digitally-enabled sales accounted for 65 percent of total sales, while Zelle transactions grew 21 percent in value to $139 billion. Analysts believe the bank’s leadership in mobile banking satisfaction, as certified by J.D. Power, and its high proportion of primary checking accounts (92 percent) provide a competitive moat in retail banking.

Why did investment banking fees decline despite healthy deposit and loan growth in global banking?

The global banking segment posted net income of $1.7 billion, down from $2.1 billion a year ago, as revenue declined six percent to $5.7 billion. Total investment banking fees, excluding self-led transactions, fell nine percent year-on-year to $1.4 billion, reflecting weaker corporate issuance and advisory activity. Business lending revenue also declined, although treasury service charges rose 15 percent due to higher transaction volumes. Average deposits in this segment increased 15 percent to $603 billion, while average loans and leases grew four percent to $388 billion.

Institutional investors expressed caution about the persistent weakness in investment banking fees, even as analysts acknowledged the bank’s strength in treasury and cash management services, which continue to generate stable fee-based revenues. They noted that maintaining relationships with 78 percent of the Global Fortune 500 positions the bank well for a rebound in corporate finance activity once deal-making conditions improve.

What explains the strong performance in global markets despite higher operating expenses?

The global markets division delivered net income of $1.5 billion, up from $1.4 billion in the year-ago quarter, with revenue rising 10 percent to $6.0 billion. Sales and trading revenue increased 14 percent to $5.3 billion, led by a 16 percent jump in fixed income, currencies, and commodities (FICC) trading, driven by strong macro product performance. Equities revenue rose 10 percent to $2.1 billion, supported by higher client activity. The quarter marked the 13th consecutive period of year-over-year sales and trading revenue growth.

Noninterest expense in the segment increased nine percent to $3.8 billion, largely due to higher revenue-linked costs and continued investment in technology and people. Analysts described the markets performance as a highlight of the quarter, pointing to the bank’s leadership in research coverage and trading, as evidenced by its top rankings in municipal bonds underwriting and equity derivatives.

How are wealth and investment management flows influencing Bank of America’s overall growth profile?

Global Wealth and Investment Management (GWIM) posted net income of $1.0 billion, broadly flat year-on-year, while revenue grew seven percent to $5.9 billion, driven primarily by a nine percent increase in asset management fees. Total client balances reached $4.4 trillion, up 10 percent year-on-year, supported by $14 billion in asset under management (AUM) flows during the quarter. Average deposits declined four percent to $277 billion, while average loans and leases increased seven percent to $237 billion.

Institutional investors view the strong AUM flows as a positive indicator of cross-selling opportunities and revenue diversification, particularly as 86 percent of GWIM households and relationships are digitally active. Analysts suggested that sustained growth in high-margin managed accounts could offset any longer-term compression in net interest margins if rate cuts materialize later in 2025.

What is the overall balance sheet strength and future outlook for Bank of America?

Bank of America ended the quarter with total deposits exceeding $2.0 trillion, up five percent year-on-year, and total loans and leases of $1.15 trillion, up nine percent. The common equity tier 1 (CET1) capital stood at $201 billion, with a CET1 ratio of 11.5 percent under the standardized approach, comfortably above regulatory minimums but down 26 basis points from the previous quarter. The bank returned $7.3 billion to shareholders through $2.0 billion in common dividends and $5.3 billion in share repurchases, and announced plans to raise its quarterly dividend by eight percent in 3Q25.

Looking ahead, the bank expects net interest income to rise further, projecting $15.5 billion to $15.7 billion in 4Q25, driven by mid-single-digit loan growth and low-single-digit deposit growth. However, management also warned that potential 25 basis point interest rate cuts in September and October could temper the pace of NII expansion. Analysts remain cautiously optimistic, noting that while the bank’s consumer and markets businesses provide resilience, the timing of a recovery in investment banking remains a key swing factor for earnings growth in the second half of 2025.