Bank of America Corporation (NYSE:BAC) earns interest and fees from lending, payments, wealth management, and capital-markets services for households and businesses. CashPro helps corporate treasurers manage cash and payments. For investors exploring established financial institutions, Bank of America is worth considering among the 10 Most Active Blue Chip Stocks to Buy Right Now.
Treasury Relationships Can Become Harder to Replace
Bank of America Corporation processed 213 million CashPro payments in the first half, up 10%. That growth preceded September’s Payments Insights launch. The new tools help clients analyze payment efficiency, cross-border flows, and working capital, including comparisons with peers.
For Bank of America Corporation, established payment records and approval processes can make switching disruptive. Retaining clients longer could spread technology costs over more years and encourage additional deposits, foreign exchange and financing. The test is whether switching costs translate into shareholder returns. Product-specific retention gains and profits remain undisclosed.
Forward Earnings Must Outrun Costs
Bank of America Corporation carried an 11x forward P/E against 13x trailing P/E before the latest quarterly reports. Trailing P/E uses past earnings, while forward P/E uses forecast earnings. The 11x valuation looks fair, with higher sustainable earnings needed to support a stronger multiple.
Bank of America Corporation has operating drivers that support the earnings-growth outlook. Third-quarter net interest income rose 8% to $16.4 billion as loans and deposits grew and fixed-rate assets repriced. Repurchases also support EPS. These mechanisms help bridge historical and forecast earnings, without establishing a CashPro profit contribution.
Costs complicate that improvement. Third-quarter GAAP EPS was $0.91, versus company-adjusted, non-GAAP EPS of $1.08 excluding a $1.2 billion regulatory settlement. That charge reinforces the need for payment growth to fund effective controls.
The Historical Discount Needs Better Economics
Bank of America Corporation carried a 13x forward P/E at year-end 2025, above the 11x pre-results valuation. Uneven capital-markets earnings and higher expenses justify caution about restoring that multiple. A lower valuation becomes attractive when recurring profits strengthen sufficiently to absorb those pressures.
Bank of America Corporation reported 10% growth in third-quarter treasury service charges, yet Global Banking revenue was approximately flat at $6.2 billion. Expenses rose 7%, and segment net income fell approximately 5% to $2.0 billion. Stronger treasury fees did not translate into stronger segment earnings.
Industry competition adds another cost. Higher-yielding alternatives can force banks to pay more to retain deposits. For CashPro, that could reduce the interest profit from deeper treasury relationships, even if clients bring more cash and payment activity. Additional lending also requires capital, and customer data does not eliminate credit risk.
The Closest Peer Earns Its Premium
Bank of America Corporation compares with JPMorgan Chase & Co., whose forward P/E was 14x in the same pre-results snapshot. Analysts project 2026 adjusted, non-GAAP EPS of $4.57 versus $3.81 in 2025, about 20% growth. The peer’s $24.09 forecast versus $19.73 implies 22% growth. Both fiscal years end in December.
The profitability gap is more substantial. Excluding its settlement, the bank’s company-adjusted, non-GAAP return on equity was 11.1%, against the peer’s reported 17%. Stronger returns support a premium despite differences in business mix. For readers of 10 Most Active Blue Chip Stocks to Buy Right Now, improving relationship profitability is the test for narrowing that valuation gap.
Conclusion
Bank of America Corporation looks fairly valued on that 11x forward P/E basis. CashPro could support a higher multiple if stronger retention and additional services produce sustained profits after technology, funding, compliance, and credit costs. Rising payment activity must ultimately improve returns on equity.
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This article is originally published at Insider Monkey.
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