Bank of America beat profit estimates as trading, investment banking shine

The Bank of America logo is seen on a branch office in Boston. (AP Photo/Michael Dwyer, File)

Bank of America beat estimates for first-quarter profit, boosted by record equities trading and higher investment banking fees from a rebound in mergers and acquisitions.

Shares of the company rose 1.5 per cent in trading before the bell on Wednesday.

Global equity markets entered 2026 on a bullish trajectory, buoyed by year-end momentum from interest rate cuts worldwide in late 2025 and robust corporate earnings.

However, that optimism soon evaporated, as a hawkish policy shift from the Federal Reserve, mounting fears of an artificial intelligence valuation bubble, and escalating U.S. involvement in Middle East tensions pressured markets.

The volatility sparked an intensified market rotation, with investors fleeing high-growth tech shares in favor of defensive value sectors.

Volatile markets tend to benefit investment banks, as trading desks generate higher revenue from increased client activity.

Bank of America’s sales and trading revenue rose 13 per cent to $6.4 billion in the first quarter, helped by record equities trading volumes.

Dealmaking helps profit boost

Global megadeals remained on a strong footing in the first three months of 2026, despite turbulence in the Middle East and swings in company valuations. Transactions in the first quarter exceeded $1.2 trillion, data compiled by LSEG showed.

Big transactions – specifically big technology M&A – dominated, with 22 deals worth more than $10 billion each signed in the three months ended March 31, a quarterly record, the data showed.

BofA Securities secured key advisory roles on several of the quarter’s largest mandates, including McCormick’s $42.7 billion acquisition of Unilever’s food business and Boston Scientific’s $14.9 billion purchase of medical device maker Penumbra.

The bank also advised on Devon Energy’s $26 billion takeover of Coterra Energy, a deal seen as a milestone in the consolidation of the U.S. shale sector.

It also led the consortium advising senior housing REIT Janus Living on its New York Stock Exchange listing in March.

BofA’s total corporation investment banking fees rose 21 per cent to $1.8 billion in the first quarter. The bank had expected a 10 per cent rise.

JPMorgan Chase reported its first-quarter profit on Tuesday that beat analysts’ estimates, also helped by a strong show in trading and dealmaking.

Wells Fargo, JPMorgan and Bank of America are all trading in red so far in 2026, underperforming the broader S&P 500 index, which was up about 1.8 per cent as of last close.

Bank of America’s net profit rose nearly 17 per cent to $8.6 billion, or $1.11 per share, in the three months ended March 31, compared with $7.4 billion, or 89 cents per share, a year earlier.

Analysts were expecting a per-share profit of $1.01, according to estimates compiled by LSEG.

“We remain watchful of evolving risks. However, we saw healthy client activity, including solid consumer spending and stable asset quality, indicating a resilient American economy,” CEO Brian Moynihan said in a statement.

Interest income resilient

Bank of America’s net interest income — the difference between what the bank earns on loans and pays out on deposits — rose nine per cent to $15.7 billion from a year earlier.

Earnings from big lenders such as JPMorgan Chase and Bank of America typically shed light on the health of the U.S. economy, reflecting shifts in consumer spending, borrowing and business activity.

U.S. banks have benefited from the repricing of ‌fixed-rate assets ⁠and securities portfolios over time into higher-yielding assets.

The rate cuts announced in the second half of 2025 by the Federal Reserve helped banks reduce deposit costs and boost demand for loans, which led to relatively stable borrowing in the quarter, even amid macroeconomic pressures.

Private credit exposure

Bank of America said that private credit portfolio finance loans were about $20 billion.

JPMorgan, Wells Fargo and Citigroup collectively disclosed about $108 billion in financing exposure to private credit or related loans during the quarterly earnings on Tuesday, but said they were comfortable with the exposure.

Private credit has become a key financing source for corporate America as tighter post‑crisis lending standards pushed borrowers to seek capital outside traditional banks.

Bank of America has earmarked $25 billion for private credit deals as it prepares a “war chest” to challenge non-bank lenders in one of the most lucrative areas of shadow banking.

The commitment, announced earlier this year, comes as the $1.8 trillion private credit market faces increased scrutiny. Alternative asset managers have seen their shares come under pressure in early 2026, due to fears of credit stress, fund outflows, and the vulnerability of technology-heavy portfolios to artificial intelligence-driven disruption.

(Reporting by Pritam Biswas in Bengaluru and Saeed Azhar in New York; Editing by Shinjini Ganguli)