Bank of America: 8% Dividend Hike in Q2
Key Points
- Earnings per share (GAAP) reached $0.89, topping analyst expectations by 3.5% (GAAP), but GAAP revenue missed forecasts.
- Net income (GAAP) climbed to $7.1 billion, with net interest income (GAAP) marking a fourth consecutive quarterly increase.
- Bank of America announced an 8% dividend hike beginning in Q3 2025, and returned $7.3 billion to shareholders.
- These 10 stocks could mint the next wave of millionaires ›
Bank of America (NYSE:BAC), the U.S. banking giant known for its vast retail, commercial, and investment banking operations, released its Q2 2025 earnings on July 16, 2025. The highlight of the announcement was earnings per share of $0.89 (GAAP), beating analyst expectations of $0.86 (GAAP). Net income (GAAP) rose to $7.1 billion, also ahead of the prior-year period. However, total revenue (GAAP) of $26.5 billion slightly missed consensus estimates of $26.77 billion. The quarter was marked by strong net interest and trading income. Overall, the period saw solid profit generation, ongoing deposit and loan growth, and a signal of growing capital returns.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.89 | $0.86 | $0.83 | 7.2 % |
| Revenue (GAAP) | $26.5 billion | $26.72 billion | $25.4 billion | 4.3 % |
| Net Interest Income (GAAP) | $14.7 billion | $13.7 billion | 7.3% | |
| Net Income | $7.1 billion | $6.9 billion | 2.9 % | |
| Provision for Credit Losses | $1.6 billion | $1.5 billion | 6.7 % |
Source: Analyst estimates for the quarter provided by FactSet.
Understanding Bank of America's Business and Recent Focus
Bank of America operates one of the largest consumer banks in the United States, with significant presences in commercial banking, investment banking, wealth management, and global markets. Its franchise spans retail branches, digital platforms, credit cards, lending, and securities trading for clients ranging from individuals to major corporations.
The bank’s key strategic focuses include regulatory compliance, staying ahead in technology adoption, managing risk, and strengthening human capital—the professionals who serve its clients and oversee its operations. Growth depends on attracting and deepening client relationships, leveraging digital channels, and balancing profitability with risk controls. The ability to generate consistent revenue and maintain strong capital ratios is crucial, especially in the face of complex, evolving regulations and competitive pressure from both established banks and technology-driven newcomers.
Quarter in Review: Results, Trends, and Notable Developments
The quarter saw net income rise to $7.1 billion, and EPS (GAAP) reached $0.89, both higher than the prior-year period and ahead of analyst estimates on the bottom line (GAAP EPS). Revenue (GAAP) reached $26.5 billion, up 4.3% year over year, though this figure missed analyst expectations by about 0.8% (GAAP). Net interest income—income from lending and investing—grew for the fourth consecutive quarter. This growth reflected increased average deposits and a 7% year-over-year uptick in loans.
Investment banking fees, especially, fell 9%. Global Banking segment revenue decreased 6%. The Global Markets segment performed strongly, with trading revenue up 14%, and Fixed Income, Currencies, and Commodities (FICC) revenue was up 16%. Within wealth management, asset management fees rose 9% as client balances topped $4.4 trillion, though higher compensation and technology investments reduced profit margins in that business.
Noninterest expense—the bank’s outlays on salaries, technology, and other operational needs—rose 5%. Noninterest expense of $17.2 billion, up 5%, was driven by higher revenue-related expenses and investments in people, brand, and technology. Bank of America’s efficiency ratio, which measures costs relative to revenue, improved in consumer banking. Digital banking continued to gain ground with 49 million active digital users, and 65% of all sales were digitally enabled.
Risk management remained a priority. The provision for credit losses increased to $1.6 billion but stayed in line with previous quarters. The net charge-off ratio—a measure of loans unlikely to be repaid—held steady at 0.55% (GAAP), with consumer delinquencies leveling off and card net charge-offs improving from a year ago. Allowance for loan and lease losses, the reserve set aside for potential defaults, was 1.17% of total loans for Q2 2025 and 1.26% for Q2 2024, but with reserves positioned for a scenario of 6% unemployment if needed as of Q1 2025.
Capital return was notable, with $7.3 billion returned to shareholders through dividends and buybacks. Bank of America announced an 8% dividend increase for Q3 2025.
Looking Forward: Guidance and Things to Watch
The company is targeting a quarterly exit rate of $15.5 billion to $15.7 billion by the fourth quarter. Full-year expenses are forecast to rise 2% to 3%, with indications that increases may occur at the upper end due to wage and technology investment. Credit reserves remain robust to absorb unexpected shocks.
Looking ahead, investors should monitor several points. Fee revenue softness, especially in investment banking and advisory, could remain an obstacle if market conditions do not improve. Expense growth may also continue to challenge margin improvement as technology and wage pressures persist. Regulatory developments remain in focus; while capital and liquidity ratios are well above requirements, the possibility of new requirements or upcoming regulatory relief could affect capital needs and return plans. The sustainability of loan growth depends heavily on economic confidence and business investment decisions in a mixed policy environment.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,060%* — a market-crushing outperformance compared to 179% for the S&P 500.
They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.
See the stocks »
*Stock Advisor returns as of July 14, 2025
Bank of America is an advertising partner of Motley Fool Money. JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.
Recommended Articles
