Bank of America Corporation (NYSE:BAC) has a wealth franchise that deserves attention beyond lending spreads. Second-quarter 2026 Global Wealth and Investment Management net income reached $1.41 billion, roughly 16% of group earnings. That contribution matters when comparing bank stocks favored by billionaires: advisory fees diversify revenue, although rising markets still influence their value.
Bank of America Corporation carries an approximately 11x forward P/E against 13x trailing P/E in the September valuation snapshot. Trailing P/E reflects past earnings; forward P/E uses forecasts. Stronger fees, loan growth, and repricing of fixed-rate assets support the earnings outlook. The earnings case rests on converting those revenue gains into profit after compensation, funding costs, and credit losses.
Bank of America Corporation looks fairly valued at that multiple, below the approximately 14x forward P/E of JPMorgan Chase & Co., the closest diversified banking comparison. Analysts expect 2027 adjusted EPS growth of approximately 14% versus 4%, respectively. These forecasts exclude specified items and are separate from reported earnings.
Profitability helps explain the peer premium. Second-quarter return on tangible common equity, a non-GAAP measure of profit relative to common equity excluding goodwill and certain intangible assets, was 17% versus 23% at the peer after excluding significant investment gains. Both combine lending, trading, and wealth management, supported by large deposit franchises. Faster expected growth does not erase the difference in returns or exposure to funding costs and credit losses.
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Turning Banking Relationships Into Advisory Revenue
Bank of America Corporation added approximately 5,400 net new Merrill households with at least $500,000 in balances during the second quarter, alongside roughly 430 net new private-bank relationships with at least $3 million. These additions create opportunities for investment advice, trust services and lending. An established banking network can introduce clients to advisers as their finances become more complex.
For Bank of America Corporation, 67% of wealth clients already have a deposit or lending relationship. Advisers can meet more of their financing and investment needs without acquiring every relationship from scratch. The financial test is turning retained banking relationships into broader revenue after adviser compensation and servicing expenses.
The flow figures show growth without acceleration. Assets under management, meaning assets under advisory or discretionary management, recorded $13.7 billion of net client flows in the quarter, versus $14.3 billion a year earlier. First-half inflows fell to $34.0 billion from $38.3 billion. New relationships are valuable, but client retention determines how much new business becomes lasting growth.
Separating Franchise Growth From Rising Markets
Bank of America Corporation ended June with $2.33 trillion of wealth-management assets under management. Of the approximately $212 billion increase during the quarter, $198.3 billion came from market valuation and other changes, compared with $13.7 billion from net flows. Most of the increase therefore came from sources beyond net inflows.
Bank of America Corporation nevertheless converted revenue growth into higher profit. Second-quarter wealth revenue rose 16% to $6.87 billion, including a 19% increase in asset-management fees. Expenses increased 8%, primarily because of revenue-related incentives, and pretax margin improved to 27% from 22%. First-half net income rose 37% to $2.74 billion.
Those margins already include higher incentives. However, more assets do not guarantee better fee economics. Weaker markets reduce assets used to calculate fees even when customers stay. Variable compensation can soften the impact, while technology, compliance, and servicing costs continue. Sustained inflows must support revenue through less favorable markets.
Bank of America Corporation also reported average wealth loans of $270 billion, up 14%, against deposit growth of 2%. Management increased allocated capital to approximately $22.3 billion from $19.8 billion. Lending deepens relationships, but faster loan growth brings funding needs and credit exposure alongside advisory income.
The forward multiple sits near the low end of the roughly 11x to 13x readings across five quarter-ends from June 2025 through June 2026. Improving wealth margins and fixed-rate asset repricing strengthen the earnings outlook. Slower net inflows and market-sensitive fees still warrant a discount, however. The lower multiple offers a more modest starting valuation, without establishing that earlier multiples should return.
Conclusion
Bank of America Corporation looks fairly valued at 11x forward earnings. Wealth improves diversification and profitability, but represents only part of a bank exposed to credit and funding risks. A stronger valuation requires sustained organic inflows, resilient margins, and disciplined lending. Falling inflows alongside weaker markets would undermine that case even if new-household counts remained positive.
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This article is originally published at Insider Monkey.
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