Bank of America Posts Record Q2 Results

Bank of America Corporation(NYSE:BAC) reported its Q2 2025 earnings on July 16, 2025, posting $26.6 billion in revenue (+4% year-over-year), $7.1 billion in net income, and $0.89 EPS (+7% year-over-year), accompanied by record quarterly net interest income (NII) of $14.8 billion (+7%).

The quarter also featured $5.3 billion in share repurchases, $2 billion in dividends paid, and confirmation of unchanged guidance for record net interest income (NII) in the second half of 2025, despite continued expense pressures and strategic reinvestment in artificial intelligence and digital capabilities.

Record Net Interest Income and Deposit Performance Underscore Franchise Strength

Average deposits exceeded $2 trillion, with average deposits growing for eight consecutive quarters outpacing industry growth rates (39% vs. 37%) and large bank growth rates (32%) from pre-pandemic to present. NII’s rise was made possible by disciplined deposit pricing—its cost was just 58 basis points for consumer and 146 basis points all-in—supporting resilient earnings and capital return potential.

"We have produced $14.8 billion in NII, a record for the company, growing 7% from the second quarter in 2024. This represents the fourth quarter of NII growth in line with the guidance we have been giving you, supporting that average deposits have now grown for eight consecutive quarters and we have achieved this while maintaining very disciplined deposit pricing."
— Brian Moynihan, Chairman and CEO

The blend of digital-first customer engagement and AI-enabled workforce optimization creates ongoing expense containment and productivity gains, underpinning sustainable efficiency ratio improvement as NII and client activity scale higher.

AI and Digital Execution Drive Durable Efficiency Improvements

Nearly 80% of consumer households are now fully digitally engaged, with 4 billion logins and 65% of consumer product sales executed through digital channels. AI platform “Erica” now handles 58 million interactions monthly, and AI tools have led to a 10%-15% reduction in code generation costs for 17,000 developers, with operating leverage gained through a reduction in headcount from 300,000 to 212,000 over the past fifteen years.

"Fifteen years ago, to make it an understanding how much an impact technologies had, fifteen years ago the company had a headcount of 300,000. Today, we have 212,000. We did that with a relentless application of scalable, secure, resilient technologies. Customer behavior also changed and matched digitization simplification of products, machine learning and models and process improvements helped us get there. Now we have a chance to capture the value that with the new enhanced capabilities of AI machine learning."
— Brian Moynihan, Chairman and CEO

The blend of digital-first customer engagement and AI-enabled workforce optimization creates ongoing expense containment and productivity gains, underpinning sustainable efficiency ratio improvement as NII and client activity scale higher.

Proactive Capital Return and Flexibility Amid Regulatory Shifts

Shareholder distributions reached $7.3 billion (+40% year-over-year for the first half of 2025), with tangible book value per share up 9% to $27.71. Following its recent Comprehensive Capital Analysis and Review (CCAR) results, the management plans an 8% common dividend increase, starting in September 2025, pending board approval and confirmed a willingness to return capital more aggressively while targeting a 50 basis point buffer above the minimum CET1 ratio as new regulatory averaging proposals phase in by 2026.

"So, we believe in appropriate buffer is 50 basis points plus or yep. Yep. 50 basis points, and that's what we are running down to you know, pushing down before. We always want that to be utilized for lack of better word by the core businesses because that's we're here for. So we pay our dividends. We're basically using all the incremental capital to repurchase shares and then letting the business use up the excess capital to grow."
— Brian Moynihan, Chairman and CEO

Near-term capital flexibility and explicit capital return targets improve visibility for investors, while lower stress capital buffer requirements and ongoing regulatory changes allow further optimization between growth investment and shareholder payouts.

Looking Ahead

Management reaffirmed expectations for Q4 2025 net interest income of $15.5 billion to $15.7 billion on a fully taxable equivalent (non-GAAP) basis, representing projected full-year NII growth of 6%-7% for 2025 on a fully taxable equivalent basis, and confirmed that 2026 will also benefit from asset repricing tailwinds.

Expenses are expected to stabilize or trend modestly lower in the second half of 2025 as revenue-related costs plateau, driving operating leverage and lower efficiency ratios. The planned 8% common dividend increase will take effect in September, pending board approval.

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Bank of America is an advertising partner of Motley Fool Money. This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.