Bank of America Shares Climb 23.1% YTD: Is It Too Late to Buy?

Shares of Bank of America BAC, the second-largest U.S. bank, are poised for another year of double-digit gains, building on its strong 30.5% rally in 2024.So far this year, BAC stock has risen 23.1%, outperforming the S&P 500 Index. Meanwhile, it has lagged JPMorgan JPM and Citigroup’s C share price jump of 31.9% and 53.2%, respectively, in the same time frame.YTD Price Performance Image Source: Zacks Investment ResearchInvestors wonder whether this is the correct time to buy Bank of America stock or if they should wait for a better entry point. For that, let’s check the company fundamentals and current macroeconomic backdrop to see how the shares will fare going forward.Factors That Will Support Bank of America StockInterest Rate Cuts: The Federal Reserve lowered rates twice this year to 3.75%-4.00%, with another 25 basis points (bps) cut expected next week. This followed a 100-bp cut in 2024. Being one of the most interest rate-sensitive U.S. banks, BAC’s net interest income (NII) is expected to face pressure as interest rates come down. However, fixed-rate asset repricing, higher loan and deposit balances and a gradual fall in funding costs are expected to offset the adverse impact of lower rates. As rates decline, lending activity is expected to increase. Also, easing regulatory capital requirements will help channel excess capital into loan growth, particularly within resilient commercial and consumer segments. Hence, Bank of America is likely to witness a decent demand for loans, which will support NII expansion. Over the medium term, loans and deposits are expected to witness a CAGR of 5% and 4%, respectively.  Bank of America projects a 5-7% year-over-year increase in NII for 2026, after similar growth this year. Likewise, JPMorgan and Citigroup are likely to demonstrate resilience and steady growth in NII. For 2025, Citigroup expects NII (excluding Markets) to grow 5.5%. JPMorgan anticipates 2025 NII to be $95.8 billion, up more than 3% year over year. Nonetheless, as interest rates decline, both are likely to face some headwinds in 2026.Network Expansion & Digital Reach: Bank of America is highly focused on its financial centers as a core part of its growth strategy, combining digital and physical convenience for clients. The company operates 3,650 financial centers in the country and is actively expanding its footprint, especially in growth markets. Since 2019, it has opened 300 new financial centers and renovated more than 100.BAC has entered 18 new markets since 2014 and plans to open financial centers in six additional markets through 2028. This expansion has already added 170 new financial centers and $18 billion in incremental deposits in those markets. The bank sees the physical network as critical to driving core deposit and account growth, even in a heavily digital era, thanks to client preference for local, trusted in-person advice and expanded relationship opportunities.The bank's strategic investment in new financial centers and expansion into new markets reflects a broader industry shift toward optimizing branch networks to deepen customer relationships and tap into new business opportunities. In this competitive environment, the ability to blend digital convenience with in-person expertise is expected to give Bank of America long-term leverage in the evolving banking landscape.The company plans to continue strengthening its technology initiatives and spend heavily on these. These efforts help it attract and retain customers and boost cross-selling opportunities.Fortress Balance Sheet & Solid Liquidity: Bank of America’s liquidity profile remains solid. As of Sept. 30, 2025, average global liquidity sources totaled $961 billion. The company’s investment-grade long-term credit ratings of A1, A- and AA- from Moody’s, S&P Global Ratings and Fitch Ratings, respectively, and a stable outlook facilitate easy access to the debt market.BAC continues to reward shareholders handsomely. The company cleared this year’s stress test conducted by the Fed and raised the dividend by 8% to 28 cents per share. In the past five years, it has raised dividends five times, with an annualized growth rate of 8.83%. Similarly, JPMorgan and Citigroup cleared their stress tests and announced higher quarterly dividends. JPMorgan declared a quarterly dividend of $1.50 per share, representing a rise of 7% from the prior payout. Citigroup announced an increase in its quarterly dividend by 7% to 60 cents per share.Additionally, Bank of America has announced a new share repurchase plan under which it is authorized to buy back $40 billion worth of shares. The company intends to buy back shares worth $4.5 billion every quarter in the near term. Investment Banking (IB) Business: As global deal-making came to a grinding halt at the beginning of 2022, it weighed heavily on Bank of America’s IB business. Though the company’s total IB fees plunged in 2022 and 2023, the trend reversed in 2024. This year has had its share of hiccups. It began on an optimistic note, although the market sentiment cooled after the launch of Trump’s tariff policies on 'Liberation Day.' However, after the initial setback, deal-making activities have regained momentum. Many deals that were put on hold are resuming as there is more clarity about the direction of the economy and tariff plans, with capital remaining available. Thus, BAC’s IB business performance was decent in the first nine months of 2025.Bank of America targets mid-single-digit CAGR in IB fees and a 50 to 100-bp market share gain over the medium term, building on its 136-bp gain as of the third quarter of 2025. Management plans to deepen integration between corporate and IB, expand middle-market coverage and pursue more large deals. Growth will be driven by AI-enabled insights, senior talent and holistic capital solutions, including private credit and alternative investments, while leveraging its global client reach across 87 jurisdictions.Asset Quality: Bank of America’s asset quality has been weakening. While the company recorded negative provisions in 2021, a substantial jump in provisions occurred in the following years due to a worsening macroeconomic outlook. The metric surged 115.4% in 2022, 72.8% in 2023 and 32.5% in 2024. Similarly, net charge-offs grew 74.9% in 2023 and 58.8% in 2024. The uptrend for both continued in the first nine months of 2025.As interest rates are less likely to decline substantially in the near term, it is expected to hurt the borrowers’ credit profile. The company remains vigilant about the effects of continuous high rates on its loan portfolio. The impact of tariffs on inflation is now clearly visible, with numbers trending higher. Hence, the company’s asset quality is expected to remain subdued.BAC Targets Double-Digit Earnings Growth in the Medium TermBank of America’s medium-term strategy focuses on responsible growth, maintaining risk discipline while investing in technology, capital and talent to scale efficiently. It invests more than $4B annually in tech, expanding AI, automation, cybersecurity and digital engagement to strengthen client relationships and productivity.BAC plans to use data and AI across lending, risk and advisory to improve efficiency, with growth led by higher-return businesses like middle market, global banking and wealth management, alongside international expansion and broader capital solutions.The bank targets a 55-59% efficiency ratio, along with decent loan and deposit growth. While outcomes will hinge on macro conditions, credit quality, rates and potential regulatory/tech cost pressures, these goals look attainable given BAC’s cost-control track record, diversified earnings and strong digital adoption. As such, the company aims to achieve earnings growth of almost 12% in the medium term.Bank of America’s Near-Term Earnings & Valuation AnalysisOver the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings per share has been revised upward to $3.80 and $4.35, respectively. The consensus estimate for earnings indicates 15.9% and 14.5% growth for 2025 and 2026, respectively. Bank of America Earnings Estimates Image Source: Zacks Investment ResearchBank of America stock is currently trading at a 12-month trailing price-to-tangible book (P/TB) of 1.98X, which is below the industry’s 3.07X. This shows the stock is trading at a discount.P/TB Ratio (TTM) Image Source: Zacks Investment ResearchBAC stock is inexpensive compared with JPMorgan, which has a P/TB of 3.17X. On the other hand, it is trading at a premium compared with Citigroup’s P/TB of 1.17X.Should You Buy or Avoid Bank of America Stock Now?Even after a strong run, Bank of America stock still looks buyable because the setup for 2026 supports earnings power. While Fed cuts can pressure NII in the near term, repricing of fixed-rate assets, improving deposit costs and rising loan/deposit balances should help offset headwinds, with management targeting 5-7% NII growth in 2026. With a potential pickup in lending as rates ease and capital rules relax, the fundamental backdrop remains constructive.BAC also has multiple levers that can compound returns. Its expanding physical network, paired with deep digital engagement, supports core deposit growth and cross-sell, while the IB cycle is recovering and management is targeting share gains. With a fortress liquidity profile, an 8% dividend hike and a new $40B buyback plan, shareholders are paid to hold, especially with the stock still trading at a discount to the industry.At present, Bank of America carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks