Bank of America shouted to the market: consumers' “money bags” are still stable, price pressure concerns are exaggerated, and the annual net interest income sword guides the upper limit

The Zhitong Finance App learned that the second-quarter profit announced by Bank of America (BAC.US) on Tuesday exceeded Wall Street expectations. Global market turmoil boosted its transaction revenue to a record high, while the surge in mergers and acquisitions activities led to strong growth in the investment banking business. The bank's biggest profit engine consumer business shows that consumers can still pay their contracts on time and continue to spend in optional consumer fields such as travel and entertainment, which contrasts with the market's general concern that price pressure is dragging down American households.

Alastair Borthwick (Alastair Borthwick), the bank's chief financial officer, said that net interest income for the full year of 2026 is expected to reach the upper limit of the previous 6% to 8% growth guidance range.

Affected by the tense situation between the US and Iran, market concerns about global crude oil supply are heating up, driving up oil prices, while increasing uncertainty about interest rate prospects and continued inflation. Investors remain cautious and continue to adjust their portfolios in this context.

According to the data, in the three months ending June 30, the bank achieved revenue of 31.6 billion US dollars in the second quarter, exceeding average market expectations, and achieved net profit of 9.1 billion US dollars, or 1.21 US dollars per share, exceeding analysts' previous expectations of $1.13. The same period last year was 7.2 billion US dollars, or 0.90 US dollars per share.

Consumer resilience remains, and concerns about price pressure are excessive

Despite continuing macroeconomic uncertainty, strong consumer spending has supported the resilience of the US economy and has become an important catalyst for the banking sector.

Bank of America's largest profit engine, the consumer business recorded a profit of nearly 3.3 billion US dollars in the second quarter. The business relied on about 39 million checking accounts, providing Bank of America with a macro perspective on the health of the US economy.

Financial data shows that consumers are still able to pay their contracts on time and continue to spend in optional consumer fields such as travel and entertainment, which contrasts with the market's general concern that price pressure is dragging down American households.

CEO Brian Moynihan (Brian Moynihan) said in an analysts' conference call: “The US economy has shown resilience beyond expectations, thanks to strong consumption, full deployment of AI-related investments, and falling energy costs.” But at the same time, he warned, “Inflation and tight monetary policy are still major risks.”

This is in stark contrast to the signals released by other sectors, and many companies have warned that consumers are beginning to be pressured. Earlier this month, PepsiCo (PEP.US) said consumers are buying fewer snacks as gasoline prices have risen.

Bank of America presentation materials show that in the first half of this year, gasoline spending contributed a major part of the bank's consumer-side growth. During this period, it rose 14% year over year, making it the largest category of debit and credit card spending, followed by entertainment and travel, both of which also recorded growth.

Despite rising costs of essential consumer goods, Bank of America executives said consumer fundamentals remain stable, supporting the business segment to achieve ambitious annual net profit targets. Last year, the department, headed by Holly O'Neill (Holly O'Neill), proposed to achieve an annual profit of $20 billion by 2030, while strictly controlling costs to reduce efficiency ratios.

Consumer demand continues to drive demand for new loans, providing a stable operating foundation for large commercial banks through interest income. Bank of America's net interest income for the second quarter — the difference between loan earnings and deposit interest payments — increased 9% year over year to $16 billion. Average loan and lease balances increased by 8%, and all business segments achieved overall growth.

Chief Financial Officer Borthwick said that optimistic expectations for full-year net interest income growth are based on loan and deposit growth expectations, fixed rate asset repricing, and balance sheet optimization.

“Consumers have remained resilient, and average deposits, investment balances, and expenses all increased month-on-month,” Borthwick said on the conference call. In this business segment, “credit quality remains strong and in line with expectations.”

He added, “Our strategy is working. We are making disciplined investments to achieve organic growth, increase market share, maintain strong operating metrics, and drive higher levels of growth and profitability.”

Using market fluctuations to create transaction records, investment banks are bright, and mergers and acquisitions continue

Large investment banks usually benefit from market fluctuations, and trading departments receive higher revenue due to increased customer trading activity. Bank of America's second-quarter sales and transaction revenue jumped 33% year over year to a record $7.1 billion, compared to $5.3 billion in the same period last year. CEO Brian Moynihan (Brian Moynihan) previously said the bank expects the business to increase by 15%. Among them, revenue from the stock business rose sharply by 70% to 3.6 billion US dollars.

The bank's stock price has accumulated an increase of about 8% since 2026. As of press release, it has risen slightly by 0.05% after the market. The year's performance has outperformed peers J.P. Morgan Chase (JPM.US) and Wells Fargo Bank (WFC.US).

Evercore ISI stated in a research report entitled “Hot as Hot as Summer”: “Overall, Bank of America performed very well this quarter, but it seems that the market had some expectations for this overall positive performance — the stock has increased 6% over the past month.”

J.P. Morgan Chase and Wells Fargo also announced second-quarter earnings reports on Tuesday, which also exceeded profit expectations due to strong trading and investment banking business.

In terms of mergers and acquisitions, according to data from the London Stock Exchange Group, in the first half of 2026, global mergers and acquisitions of more than 10 billion US dollars surged to a record level. A more relaxed regulatory environment has encouraged large enterprises in various industries to seize opportunities to advance transactions.

Bank of America Securities acted as the joint bookkeeper of Elon Musk's SpaceX (SPCX.US) record $2 trillion initial public offering (IPO). This historic listing has greatly boosted the US IPO market and fueled its 2026 recovery process. In addition, the bank also acted as a financial advisor for the US power company NextEra Energy (NEE.US) to acquire Dominion Energy (D.US) for $66.8 billion. The deal was announced in May.

Bank of America's total investment banking transaction fee revenue in the second quarter increased by 50% to reach 2.1 billion US dollars. Moynihan said earlier in the quarter that the investment business was “doing well.”

Stephen Biggar (Stephen Biggar), director of financial services research at Argus Research, stated, “AI-driven capital expenditure supercycles benefit stock issuance, mergers and acquisitions, and debt financing, while various asset fluctuations caused by Iran-related factors boost trading operations.”

“The volume of mergers and acquisitions announced worldwide reached $2.5 trillion in the first half of the year, which will continue to generate returns — as transactions are completed in the next 6 to 9 months, banks will receive corresponding revenue, while reserves for large-scale IPO projects will remain sufficient in the second half of the year.”