BAC’s Fee Revenue Set to Rise Thanks to Strong Capital Markets Results in Q1

Bank of America Signals Strong Capital Markets Outlook for Q1 2026

During the Royal Bank of Canada Global Financial Institutions Conference, Dean Athanasia, co-president of Bank of America, expressed optimism about the company’s capital markets performance for the first quarter of 2026. His remarks boosted investor confidence, resulting in BAC shares climbing 1.4% and breaking last week’s downward trend.

Athanasia highlighted that investment banking fees have increased by nearly 10% compared to the same period last year. In the fourth quarter of 2025, investment banking fees reached $1.67 billion, showing a slight annual rise. This growth was driven by higher advisory revenues and steady debt underwriting, which compensated for a drop in equity underwriting income. Analysts estimate that investment banking fees will total $1.85 billion for the current quarter.

Bank of America’s Global Markets division is expected to see revenue growth in the low double digits for Q1 2026, fueled by heightened market volatility and active client participation. Athanasia noted, “We still have about 15 or 16 trading days left, and there’s plenty of activity.” He also warned that ongoing instability in the Middle East could impact results as the quarter concludes. Despite these challenges, the Global Markets segment is poised to achieve its 16th straight quarter of year-over-year sales and trading revenue growth. Last quarter, BAC reported $4.52 billion in sales and trading revenues, marking a 10% increase from the previous year. The consensus forecast for Q1 2026 sales and trading revenues stands at $5.32 billion.

In wealth management, Athanasia reported that fees have risen by double digits, which bodes well for the first quarter. Net interest income is projected to grow 7% year over year, supported by healthy loan and deposit expansion.

With sales and trading, investment banking, and wealth management contributing over half of Bank of America’s fee income, continued strength in these areas is expected to drive robust growth. The consensus estimate for non-interest income is $14.02 billion, reflecting a 9% increase from the prior year.

Peer Expectations: Investment Banking and Trading Outlook for Q1

Similar to Bank of America, JPMorgan and Citigroup are anticipated to deliver strong capital markets results in the first quarter of 2026.

JPMorgan’s management, during its February update, expressed confidence in deal activity and capital markets momentum. They forecast investment banking fees to rise by mid-teen percentages in Q1 2026, possibly reaching the high teens. Trading revenues are also expected to grow in the mid-teen range, supported by increased volumes during periods of volatility.

At the same RBC conference, Citigroup reaffirmed its strategic goals and financial targets, emphasizing significant growth opportunities despite ongoing geopolitical and economic uncertainties. Citigroup projects that both investment banking fees and markets revenues (including equities and fixed income) will grow by mid-teens year over year in Q1 2026, driven by active deal-making and equity capital markets activity.

Bank of America Share Performance and Analyst Ratings

Over the past three months, Bank of America shares have declined by 11.9%, compared to a 9.2% drop for the broader financial investment banking industry.

Source: Zacks Investment Research