MW Bank of America lifts its profit outlook. Here's why it's not boosting the stock.

By Steve Gelsi

Megabank has lowered interest payments through refinancings, and has increased productivity by investing heavily in AI technology

Bank of America's stock is moving lower on Wednesday.

Bank of America Corp. lifted its outlook for long-term profit growth on Wednesday, but investors weren't impressed enough to push the megabank's stock - which has seen stellar gains so far this year - up further.

The bank said it now expects net interest income - money the bank makes on loans after it pays out interest for deposits - to grow at a compounded annual rate (CAGR) of 5% to 7% between 2026 and 2030.

Previously, the bank had logged a 4% growth rate in net interest income between 2015 and 2024.

The improved growth outlook comes as the bank has spent $118 billion on technology in the past 10 years, including on its artificial-intelligence assistant Erica, which has improved productivity by leading to a drop in call volumes to the bank.

It's also getting an earnings boost from the repricing of assets on its balance sheet, which has reduced interest payments.

So far in 2025, Bank of America has grown net interest income at a rate of 6%, so the new forecast isn't any better than how the bank is faring now. It also includes the possibility that growth could dip below current levels to 5% on the low side.

The estimate came as part of a 300-page presentation by the bank, which is holding its first investor day since 2011.

Bank of America's stock (BAC) was down 1.2% in recent premarket trading on Wednesday. The stock has already climbed 21.8% in 2025 through Tuesday, outpacing the 15.1% year-to-date gain in the S&P 500 index SPX, as well as the 8.5% rise in the Financial Select Sector SPDR ETF XLF.

Bank of America also increased its target for return on tangible common equity, or ROTCE, to 16% to 18% a year, ahead of its previous forecast of growth in the midteens percentage range. ROTCE is an indicator of income generated on bank balance sheets from loans and securities.

In the third quarter, Bank of America posted ROTCE growth of 15.4%.

Drilling down into the company's forecasts, Bank of America said it would leverage its bulk to win more market share in areas such as middle-market business lending.

It's currently No. 1 in retail deposits among all U.S. banks, with a $298 billion lead of the No. 2 player and a 34% increase in consumer deposits since 2019.

The cost of deposits has fallen 46% since 2010. The bank now has the lowest consumer cost of deposits in the industry, according to its presentation.

Bank of America's stock-price gains this year have been partly fueled by expectations of rate cuts by the U.S. Federal Reserve, which could stimulate more borrowing, as well as investor preference for more diversified banks rather than regional banks as a way to protect against volatility in the business.

-Steve Gelsi

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November 05, 2025 09:23 ET (14:23 GMT)

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