From 24/7 Wall St. · Omor Ibne Ehsan · · 1m 30s
Fed Rate Hike Boosts Bank of America
Fed rate hike lifts Bank of America earnings but stock drops.
In brief
Fed rate hike lifts Bank of America earnings but stock drops. Bank of America's earnings benefit from a hawkish Fed but stock fell as investors priced in credit risks. Originally reported by 24/7 Wall St..
Fed Rate Hike
The Federal Reserve raised its target range on September 16, 2026, lifting the upper bound to 4.00% from 3.75%.
Bank of America Stock Drop
Bank of America closed at $56.22, down 3% on the session and 8.43% over the past month.
Asset-Sensitive Balance Sheet
Bank of America runs one of the more asset-sensitive balance sheets among megabanks with a +100 bps parallel shift adding $1.0 billion in net interest income.
Credit Card APR
The average credit card APR sits at 20.94%, inside what the Fed calls record territory.
Net Interest Income
Second-quarter net interest income was $16.00 billion, up 9% year over year with full-year 2026 guidance at the high end of 6% to 8%.
Deposit Beta
BAC’s consumer base has $957 billion in deposits paying just 48 basis points with sticky retail checking cheaper than institutional cash.
Credit Card Performance
The credit-card net charge-off rate improved to 3.55% from 3.82% a year earlier with delinquency easing to 2.85%.
Bull and Bear Case
Bull case: asset-sensitive balance sheet, securities repricing upward, guidance at high end, and $2.02 trillion in deposits. Bear case: credit deterioration, deposit costs, and CRE book risks.
The one thing
Bank of America's earnings benefit from a hawkish Fed but stock fell as investors priced in credit risks.
