Bank of America's profit falls to $6.9 billion as a $1.2 billion regulatory charge lands

Bank of America reported third-quarter 2026 net income of $6.9 billion, or $0.91 a diluted share, down from $8.3 billion, or $1.04 a share, a year earlier, after it recorded a $1.2 billion non-tax-deductible regulatory settlement charge tied to consent orders over its anti-money-laundering and sanctions compliance programs. Revenue, net of interest expense, rose 3% to $30.0 billion, and net interest income rose 8% to $16.4 billion. Excluding the charge, net income was $8.1 billion, or $1.08 a share, the company said in the earnings release it filed as Form 8-K Exhibit 99.1 on October 14, 2026.

Bank of America Corporation booked the amount as noninterest expense after consenting to orders from the Office of the Comptroller of the Currency and the Financial Crime Enforcement Network covering aspects of its U.S. Bank Secrecy Act, anti-money-laundering and economic sanctions compliance programs. Those orders were announced on October 13, 2026, the day before the results. Because the amount is not tax-deductible, nothing offsets it: the company's own reconciliation shows the charge cutting diluted earnings by $0.17, pretax income by $1.2 billion and return on average common shareholders' equity by 173 basis points, to 11.1% adjusted from 9.4% as reported. The quarter's effective tax rate was approximately 23%, and approximately 20% excluding the charge.

Net interest income and credit quality improved

Net interest income of $16.4 billion, or $16.6 billion on a fully taxable-equivalent basis, was up 8% from a year earlier, when FTE net interest income was $15.4 billion. The FTE net interest yield of 2.16% was 15 basis points higher. Average loans and leases of $1.23 trillion increased 6% over what the release calls a 10th consecutive quarter of sequential average growth, and average deposits of $2.02 trillion increased 2%.

Executive Vice President and CFO Alastair Borthwick said: "We saw healthy activity from our consumer, wealth management, business and commercial clients. Organic growth helped drive higher revenue and solid earnings." He said net interest income, up 8% from a year earlier, benefited from continued year-over-year and sequential improvement in the net interest yield, and that asset management fees rose 17%. The wealth segment's own disclosure puts asset management fees up 16% from a year earlier, to $4.5 billion.

Provision for credit losses of $1.3 billion was relatively flat against the third quarter of 2025 and below the $1.4 billion of the second quarter. Net charge-offs of $1.3 billion decreased from $1.4 billion in both prior periods, and the net charge-off ratio fell to 0.44% from 0.47%. The credit card charge-off rate was 3.22%, down from 3.46%, and the quarter included a net reserve release of $80 million. The allowance for credit losses of $14.2 billion, with $1.2 billion of that amount held for unfunded commitments, covered 1.13% of period-end loans and leases.

FICC weakness against a record equities quarter

Global Markets revenue of $5.9 billion decreased 6% from a year earlier, with sales and trading revenue of $5.1 billion down 5% on the same basis. FICC revenue fell 17% year over year to $2.6 billion on mortgages, municipals and credit, while equities revenue rose 11% year over year to $2.5 billion on client financing activity in Asia and the U.S. Total Corporation investment banking fees, excluding self-led deals, of $1.8 billion decreased 11% from a year earlier. The presentation materials nonetheless describe a "Record year-to-date sales and trading revenue" and a "Record 3Q Equities sales and trading revenue".

Wealth management was the strongest segment: revenue of $7.1 billion, up 13% from a year earlier, net income of $1.5 billion, client balances of $5.1 trillion, up 9%, and AUM flows of $20 billion. Global Banking net income of $2.0 billion was slightly below the year-ago figure, at a 52% efficiency ratio. Consumer Banking net income of $3.5 billion came on revenue of $11.6 billion, up 4% from a year earlier, helped by combined credit / debit card spend of $266 billion, up 8% on the same basis.

Capital slips as buybacks keep running

The standardized CET1 ratio fell to 10.9% from 11.2% in the second quarter and 11.6% a year earlier. CET1 capital of $198 billion decreased $3.2 billion sequentially as standardized risk-weighted assets rose to $1.82 trillion from $1.79 trillion. The desk's reading of those two disclosures is that a lower capital ratio against rising risk-weighted assets gives the company less headroom than a year ago, though the release still describes the 10.9% ratio as "well above the regulatory minimum" and the bank repurchased $6.0 billion of common stock in the quarter. Bank of America returned $8.3 billion to shareholders in the quarter, $2.2 billion through common stock dividends and $6.0 billion in repurchases. Book value per common share rose 4% from a year earlier to $39.26 and tangible book value per common share rose 3% from a year earlier to $29.14.

The consent orders and the call at 8:30 a.m. ET

Noninterest expense of $19.7 billion was $2.4 billion higher than a year earlier. Adjusted for the charge, $18.5 billion was up 7% from a year earlier, which the presentation attributes to revenue-related expenses and investments in technology and brand. Chair and CEO Brian Moynihan tied part of that spending to AI: "Our disciplined investments in AI are helping teammates serve clients better, work faster and manage risk more effectively", he said, adding that more than 200,000 teammates use AI tools and that the bank has 300-plus approved use cases.

The release sets out no formal guidance for the fourth quarter and does not quantify further penalties, timing or capital consequences from the consent orders; it states that current-period information is preliminary. Moynihan and Borthwick were scheduled to discuss the results on an investor conference call at 8:30 a.m. ET today, with replays available from noon October 14 through 11:59 p.m. ET on October 23.