Bank of America (BAC, Financial) exceeded first-quarter 2025 EPS and revenue forecasts, showcasing its resilience and the advantages of a diversified business model. The net interest income (NII) rose by 3% to $14.6 billion, meeting the company's guidance. This growth is supported by higher interest rates and modest loan growth, while strong capital inflows into the Wealth and Management segment provide stability amid volatility.

Challenges remain as high interest rates, inflation, and macroeconomic uncertainty impact BAC's lower-income borrowers. Net charge-offs in the Consumer Banking segment rose by $118 million year-over-year to $1.3 billion, indicating some credit quality deterioration.

• Consumer Banking: Credit/debit card spending grew by 4% to $228.0 billion, a slight decrease from last quarter's 5% increase. Despite this, net income fell by 5% year-over-year to $2.5 billion due to a 12% increase in provision for credit losses, which rose to $1.3 billion. Net charge-offs increased from $800 million in Q2 2024 to $1.3 billion in Q1 2025.
• Wealth and Investment Management: Similar to Morgan Stanley (MS, Financial), BAC's client balances increased by 5% to $4.2 trillion, driven by positive net client flows and higher market valuations. Since Q1 2024, positive AUM flows of $79.0 billion have boosted asset management fees and revenue, leading to a 5% revenue growth to $6.02 billion. Net income remained flat at $1.0 billion.
• Global Banking: Following reports from Morgan Stanley (MS), Goldman Sachs (GS, Financial), and JPMorgan Chase (JPM, Financial), a downturn in BAC's Global Banking segment was expected. Revenue remained flat year-over-year at $6.0 billion, with investment banking fees dropping by 3% to $1.5 billion due to declines in equity underwriting fees amid a softening IPO market.
• Trading Revenue: Like Morgan Stanley (MS), BAC achieved record equities trading revenue in Q1, driven by market volatility from the global trade war. Equity revenue increased by 17% to $2.2 billion, outperforming an 8% rise in FICC trading revenue to $3.5 billion. Trading activity for commodities and credit products remained robust.

In summary, BAC posted strong Q1 results with an 18% year-over-year EPS increase, fueled by robust NII and a solid performance in Wealth and Investment Management. However, rising net charge-offs raise concerns about credit quality, highlighting potential risks in the Consumer Banking segment as economic pressures build.