What's Likely to Fuel Bank of America's NII Momentum Into 2026?

Bank of America BAC projects a 5-7% year-over-year increase in net interest income (NII) for 2026, after similar growth this year. The outlook reflects the company’s ability to leverage a favorable rate environment, technological efficiency and a diversified business model.Loan growth is expected to strengthen as the Federal Reserve eases rates, stimulating consumer and commercial borrowing. Rising loan demand, particularly in credit cards, mortgages and corporate lending, will expand interest-earning assets. Further, Bank of America’s management noted that deposits have stabilized and are beginning to grow again across consumer and wealth divisions. This will create a lower-cost funding base to support the company’s lending activity. Additionally, asset repricing will continue to provide a meaningful boost to BAC’s NII as new high-yielding ones replace older, low-yield securities and loans. Regulatory easing in capital requirements is expected to further free up lending capacity, while expense control and continued digital transformation enhance operating leverage and profitability.BAC’s emphasis on digital transformation, AI-driven operational efficiency and ongoing branch modernization will enhance productivity and client experience. These efforts aim to attract new clients and deepen relationships, strengthening deposit growth and cross-selling opportunities.BAC’s NII has closely tracked interest rate cycles. The bank saw steady NII growth during 2018-2019 amid Fed rate hikes, followed by a sharp decline in 2020-2021 when rates fell to near zero. As rates rose again from 2022 onward, NII rebounded sharply, driven by asset repricing, robust loan demand and disciplined funding management. Despite recent margin compression as deposit costs normalized, Bank of America has sustained one of the largest NII bases among major U.S. banks given its scale, diversified portfolio and strong consumer franchise.While a sharp rate decline or economic slowdown could moderate loan demand and yield growth, Bank of America’s diversified balance sheet, expense discipline and focus on operational efficiency position it for continued, positive NII momentum through 2026.How are BAC’s Peers Likely to Fare in Terms of NII?Two of the closest peers of Bank of America are JPMorgan JPM and Citigroup C. JPMorgan’s asset-sensitive balance sheet makes it vulnerable to rate cuts, which may compress margins by reducing asset yields. However, strong loan demand and deposit growth are likely to limit the impact. JPMorgan raised its 2025 NII forecast to $95.8 billion (from $95.5 billion) and expects 2026 NII (excluding Markets) to be about $95 billion, supported by balance sheet growth and mix.Citigroup projects a 5.5% year-over-year rise in 2025 net interest income (excluding Markets), driven by modest loan growth, stable funding costs and better deposit spreads. NII growth is expected to continue in 2026 at a slower, more normalized pace. Supported by transformation efforts, cost efficiencies and digital expansion, Citigroup targets a 10–11% ROTCE by 2026, signaling sustained profitability and steady NII momentum.BAC Stock’s Price Performance, Valuation & EstimatesShares of Bank of America have risen 32.6% in the past six months.  Image Source: Zacks Investment ResearchFrom a valuation standpoint, Bank of America trades at a 12-month trailing price-to-tangible book (P/TB) of 1.93X, below the industry.  Image Source: Zacks Investment ResearchMoreover, the Zacks Consensus Estimate for Bank of America’s 2025 and 2026 earnings implies year-over-year growth of 14.9% and 14.5%, respectively. In the past month, earnings estimates for 2025 and 2026 have increased to $3.77 and $4.31, respectively. Image Source: Zacks Investment ResearchBank of America currently carries a Zacks Rank #3 (Hold). 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