We initiate coverage on BAC with a Hold rating and $50 PT. BAC is one of the world’s largest diversified financial institutions, serving 67mn clients across consumer banking, commercial lending, wealth management and global markets. At scale, the company faces margin compression that may extend the earnings lull even as pro-cyclical relief arrives. With the market pricing in 4 cuts in 2025, we forecast net interest income to slow to 6–7% in FY25E and 4% in FY26E—both notably below the Market—driving EPS of $3.55 in FY25E and $3.88 in FY26E, substantially below consensus. Our outlook fully incorporates sticky deposit costs and stable but rising net charge-offs of 50–60bps, or $6bn annually. Cost control at 2–3% is commendable, but offsetting top-line headwinds likely requires more external drivers. We value BAC at 12.8X FY26E P/E, slightly below consensus, reflecting the balance between recurring profitability and macro risks including commercial real estate exposures and credit-cycle variability, while recognizing potential capital relief. Absent a Fed pivot or fee acceleration, catalysts for a meaningful rerating are limited, so we recommend holding the shares.
Regulatory Overhang Still A Headwind
We believe that BAC’s re-engagement in buybacks reflects a constructive, if cautious, inflection in capital returns in a sector still dominated by regulatory and macro uncertainty. Over the trailing 12 months, BAC has repurchased $12.4bn of common stock, equating to a buyback yield of 4.7% (vs. >3% average among large-cap US banks and prior peak-to-trough of $7.9bn y/y). Our modeling suggests that the higher pace versus FY23 can be partly attributed to lower realized credit losses, which has