Eleven Point Four Against TenNarrow moat

Bank of America (BAC) — moat facet

Bank of America earns six points less on its equity than JPMorgan while holding three points less capital, so thin capital is not the reason.

A bank's return on equity depends on how much equity it holds, and Bank of America holds less spare capital than JPMorgan. Its CET1 ratio under the standardized approach was 11.4% at the end of 2025 and 11.2% in June 202612, against a regulatory minimum of 10.0%3. JPMorgan's was 14.6%4.

CET1 ratio, standardized (%)11.9%End 202411.4%End 202511.2%June 202610.0%Minimum14.6%JPM 2025Bank of America Q4 2025 and Q2 2026 releases, Q2 2026 10-Q; JPMorgan 10-K FY2025
Less cushion than JPMorgan, and shrinking.

The minimum has three parts: a 4.5% base, a G-SIB surcharge of 3.0% and a stress capital buffer of 2.5%5. In June 2026 the headroom of 1.2 points was worth about $21.5 billion on $1,792 billion of risk-weighted assets6.

This makes the return gap more striking. Bank of America's ROTCE of 14.22% in 20257 was earned with thinner capital than JPMorgan's 20%8; on JPMorgan's capital level its return would be lower still. The gap is not explained by one bank being more conservative.

The bank has been running its capital down on purpose, from 11.9% at the end of 20249, by returning more than it earns to shareholders.

The capital itself has barely moved. Common equity tier 1 capital was $201.1 billion at the end of 2024, $201.4 billion at the end of 2025 and $201.6 billion in June 20261011, while risk-weighted assets grew from $1,696 billion to $1,792 billion1213. The ratio fell because the bank grew and returned its earnings.

The CET1 ratio is reported each quarter. A fall below 11% before the minimum rises in 2027 would leave little room; a stable ratio with continued buybacks would mean earnings were keeping pace.

Moat trajectory: Narrowing

CET1 11.9% (2024) to 11.2% (June 2026) against a 10.0% minimum.

The number that tests this moat
Reported
CET1 ratio (standardized), latest quarter
11.2% (June 2026) vs 10.0% minimum

The capital cushion; a fall below 11% before the 2027 surcharge rise would leave little room.

Source: Bank of America Q2 2026 earnings release ↗
⚠ Threats to the moat
⚠ THREAT 01
Three and a Half Percent in 2027
Bank of America's capital minimum rises half a point in January 2027, which will eat about 40% of its current headroom.
References
  1. ReportedIts CET1 ratio under the standardized approach was 11.4% at the end of 2025 and 11.2% in June 2026, against a regulatory minimum of 10.0%.
    Bank of America fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1. — Q4 2025 · publ. 14 January 2026 · source ↗
  2. ReportedIts CET1 ratio under the standardized approach was 11.4% at the end of 2025 and 11.2% in June 2026, against a regulatory minimum of 10.0%.
    Bank of America second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - consolidated results, credit quality, capital and forward-looking risks. — Q2 2026 · publ. 14 July 2026 · source ↗
  3. ReportedIts CET1 ratio under the standardized approach was 11.4% at the end of 2025 and 11.2% in June 2026, against a regulatory minimum of 10.0%.
    Bank of America Form 10-Q for the quarter ended 30 June 2026 - held-to-maturity securities, interest-rate sensitivity, capital requirements and the OCC consent order. — Q2 2026 · publ. 31 July 2026 · source ↗
  4. ReportedJPMorgan's was 14.6%.
    JPMorgan Chase Form 10-K for fiscal 2025 - deposits, deposit cost, ROTCE, overhead ratio, CET1, net charge-offs, revenue and net income. — FY2025 · publ. February 2026 · source ↗
  5. ReportedThe minimum has three parts: a 4.5% base, a G-SIB surcharge of 3.0% and a stress capital buffer of 2.5%.
    Bank of America Form 10-Q for the quarter ended 30 June 2026 - held-to-maturity securities, interest-rate sensitivity, capital requirements and the OCC consent order. — Q2 2026 · publ. 31 July 2026 · source ↗
  6. Moat Explorer calcIn June 2026 the headroom of 1.2 points was worth about $21.5 billion on $1,792 billion of risk-weighted assets.
    Moat Explorer calculation from Bank of America's reported figures ($ millions unless stated). Deposits: cost of total deposits = interest on interest-bearing deposits / (average interest-bearing + average noninterest-bearing deposits): 2019 7,188 / 1,380,326 = 0.52%; 2021 537 / 1,914,286 = 0.03%; 2022 4,718 / 1,986,158 = 0.24%; 2023 26,163 / 1,887,541 = 1.39%; 2024 38,442 / 1,924,106 = 2.00%; 2025 34,513 / 1,984,182 = 1.74% (1,469,705 + 514,477 = 1,984,182, about $1.98 trillion). Average total deposits 2015 1,155,860; 2021 1,914,286; 2022 1,986,158 (about $1.99 trillion); 2015 to 2025 1,984,182 / 1,155,860 - 1 = 72%. Noninterest-bearing share 744,035 / 1,914,286 = 38.9% (2021); 514,477 / 1,984,182 = 25.9% (2025). Noninterest-bearing decline 751,470 - 514,477 = 236,993 (about $237 billion). JPMorgan comparison: deposit cost gap 1.80% - 1.74% = 0.06 points; 0.0006 x 1,984,182 = about 1,190 (about $1.2 billion). JPMorgan revenue per dollar of average deposits 182,447 / 2,506,565 = 7.3 cents; Bank of America 113,097 / 1,984,182 = 5.7 cents. JPMorgan year-end deposits 2,559,320 / 2,018,729 - 1 = 27%; revenue 182,447 / 113,097 - 1 = 61%; market value 935.79 / 391.80 = 2.4 times. Net income margin JPMorgan 57,048 / 182,447 = 31.3%; Bank of America 30,509 / 113,097 = 27.0%. Efficiency gap 61.65% - 52% = 9.65 points x 113,097 = about 10,914 (about $10.9 billion). Loans to deposits 1,185,700 / 2,018,729 = 58.7%. Uninsured deposits 723.0 + 134.9 = 857.9 billion; 857.9 / 2,018.7 = 42.5%; insured and other 2,018.7 - 857.9 = 1,160.8 billion. Consumer deposits per checking account 957.0 billion / 38.7 million = about $24,700. Securities: held-to-maturity unrealised loss as a share of common equity 108,596 / 244,800 = 44% (2022); 82,094 / 276,100 = 30% (June 2026). Held-to-maturity amortised cost 2021 674,591 - 2025 522,685 = 151,906 (about $152 billion); 2020 438,279 to 2021 674,591 = +236,312 (about $236 billion); 2021 fair value 665,890 - cost 674,591 = -8,701. Runoff time 505,828 / 34,794 = 14.5 years. Agency MBS share of loss 67,309 / 80,257 = 84%. Net interest income H1 31,742 / 29,113 - 1 = 9.0%. Capital: CET1 headroom (11.2% - 10.0%) x 1,792 billion = about 21.5 billion; 2027 minimum 4.5% + 3.5% + 2.5% = 10.5%. Capital returned 2025 (8.1 + 21.433) / 29.055 = 101% of net income to common. Average diluted shares 7,680.9 / 11,236.2 - 1 = -31.6%. EPS growth (3.81 / 1.31)^(1/10) - 1 = 11.3% a year. Price to tangible book 56.03 / 29.37 = 1.91. Revenue 2023 102,769 to 2025 113,097 = +10%. Compensation 42,346 / 69,727 = 61% of noninterest expense. Financial centers 3,530 / 3,664 - 1 = -3.7%. Noninterest expense Q2 2026 18,627 / 17,183 - 1 = 8.4%. Berkshire holding 483,394,015 / 1,032,852,006 - 1 = -53%. Investment banking fees Q2 2025 implied 2.1 / 1.5 = 1.4 billion. Segments (FTE, 2025): segment revenue 43,673 + 24,883 + 24,108 + 24,096 = 116,760; less All Other 3,054 = 113,706; less FTE adjustment 609 = 113,097. Shares of total FTE revenue: Consumer 43,673 / 113,706 = 38.4%; GWIM 24,883 / 113,706 = 21.9%. Shares of net income 30,509: Consumer 12,245 = 40.1%; Global Banking 7,793 = 25.5%; Global Markets 6,111 = 20.0%; GWIM 4,670 = 15.3%. Net income margins: Consumer 12,245 / 43,673 = 28.0%; GWIM 4,670 / 24,883 = 18.8% (2024 4,263 / 22,929 = 18.6%; 2023 3,947 / 21,105 = 18.7%); Global Banking 7,793 / 24,108 = 32.3%; Global Markets 6,111 / 24,096 = 25.4%. Consumer net interest income 35,309 / 43,673 = 81%; Consumer provision 4,649 / 5,675 = 82%. Growth 2023-2025: Consumer 43,673 / 42,031 - 1 = 3.9%; GWIM 24,883 / 21,105 - 1 = 17.9%; Global Markets 24,096 / 19,533 - 1 = 23.4%; Global Banking net income 7,793 / 10,072 - 1 = -23%. Consumer H1 2026 revenue 11,336 + 11,049 = 22,385. GWIM net interest income 7,197 / 24,883 = 29%. Revenue per dollar of year-end assets: Global Markets 24,096 / 1,032,858 = 2.3 cents; Consumer 43,673 / 1,039,346 = 4.2 cents. GWIM client balances 4,751,394 / 4,252,106 - 1 = 11.7%, increase 499,288; net flows 81,997 / 4,252,106 = 1.9%; consumer investment assets 639.5 / 599.1 - 1 = 6.7%. Revenue per dollar of balances: Private Bank 4,167 / 759,082 = 0.55%; Merrill 20,716 / 3,992,312 = 0.52%; Private Bank share of GWIM balances 759,082 / 4,751,394 = 16% and revenue 4,167 / 24,883 = 17%. Investment and brokerage services 19,956 / 17,766 - 1 = 12.3%. Common equity 277,251 / total assets 3,411,738 = 8.1%. AUM net flows 81,997 / 2,177,708 = 3.8%. Held-to-maturity loss 2023 97,994 / 263,249 = 37%. Share price 56.03 / 52-week high 65.23 - 1 = -14%. First half 2026 (Q1 + Q2): Consumer Banking revenue 11,049 + 11,336 = 22,385 and net income 3,060 + 3,281 = 6,341; Global Banking net income 2,087 + 2,046 = 4,133; Global Markets revenue 7,109 + 8,022 = 15,131 - capital, valuation, returns and comparisons with JPMorgan. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Bank of America's Forms 10-K and 10-Q, earnings releases, JPMorgan's 10-K, Berkshire 13F tables and market data; operands shown in the source line.
  7. ReportedBank of America's ROTCE of 14.22% in 2025 was earned with thinner capital than JPMorgan's 20%; on JPMorgan's capital level its return would be lower still.
    Bank of America Form 10-K for fiscal 2025 - financial highlights, income statement, capital and shareholders' equity. — FY2025 · publ. 25 February 2026 · source ↗
  8. ReportedBank of America's ROTCE of 14.22% in 2025 was earned with thinner capital than JPMorgan's 20%; on JPMorgan's capital level its return would be lower still.
    JPMorgan Chase Form 10-K for fiscal 2025 - deposits, deposit cost, ROTCE, overhead ratio, CET1, net charge-offs, revenue and net income. — FY2025 · publ. February 2026 · source ↗
  9. ReportedThe bank has been running its capital down on purpose, from 11.9% at the end of 2024, by returning more than it earns to shareholders.
    Bank of America fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1. — Q4 2025 · publ. 14 January 2026 · source ↗
  10. ReportedCommon equity tier 1 capital was $201.1 billion at the end of 2024, $201.4 billion at the end of 2025 and $201.6 billion in June 2026, while risk-weighted assets grew from $1,696 billion to $1,792 billion.
    Bank of America fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1. — Q4 2025 · publ. 14 January 2026 · source ↗
  11. ReportedCommon equity tier 1 capital was $201.1 billion at the end of 2024, $201.4 billion at the end of 2025 and $201.6 billion in June 2026, while risk-weighted assets grew from $1,696 billion to $1,792 billion.
    Bank of America second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - consolidated results, credit quality, capital and forward-looking risks. — Q2 2026 · publ. 14 July 2026 · source ↗
  12. ReportedCommon equity tier 1 capital was $201.1 billion at the end of 2024, $201.4 billion at the end of 2025 and $201.6 billion in June 2026, while risk-weighted assets grew from $1,696 billion to $1,792 billion.
    Bank of America fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1. — Q4 2025 · publ. 14 January 2026 · source ↗
  13. ReportedCommon equity tier 1 capital was $201.1 billion at the end of 2024, $201.4 billion at the end of 2025 and $201.6 billion in June 2026, while risk-weighted assets grew from $1,696 billion to $1,792 billion.
    Bank of America Form 10-Q for the quarter ended 30 June 2026 - held-to-maturity securities, interest-rate sensitivity, capital requirements and the OCC consent order. — Q2 2026 · publ. 31 July 2026 · source ↗
Sources
Generated September 25, 2026