⚠ Operating Leverage Needs RevenueModerate threat
Bank of America (BAC) — threat to the moat
Bank of America's efficiency gains came from revenue growing faster than costs, which lasts only as long as revenue does.
Bank of America's cost progress is real, but it has come from revenue. Noninterest expense rose from $65,845 million in 2023 to $69,727 million in 202512, and to $18,627 million in the second quarter of 2026 from $17,183 million a year earlier3. Revenue simply grew faster.
That is the model management set out: an Investor Day target of about 200 basis points of operating leverage every cycle4. It works while revenue grows, including revenue from markets businesses that can fall sharply.
Equities trading revenue rose 70% to $3.6 billion in the second quarter of 20265. A year in which that reversed would test whether the efficiency ratio holds.
Headcount shows the discipline and its limit. The bank employed about 217,000 people at the end of 2022 and about 213,000 at the end of 202567, and about 211,000 in June 20268. Holding people flat is easier than cutting them, and it only improves the ratio when revenue grows.
The first full year with operating leverage below zero is the event to watch. It would show the cost base had not been reset, only outrun.
- ReportedNoninterest expense rose from $65,845 million in 2023 to $69,727 million in 2025, and to $18,627 million in the second quarter of 2026 from $17,183 million a year earlier.Bank of America Form 8-K exhibit 99.1, revised supplemental information for the change in accounting for tax-related equity investments - restated 2023 and 2024 results. — FY2023-FY2024 · publ. 6 January 2026 · source ↗
- ReportedNoninterest expense rose from $65,845 million in 2023 to $69,727 million in 2025, and to $18,627 million in the second quarter of 2026 from $17,183 million a year earlier.Bank of America Form 10-K for fiscal 2025 - financial highlights, income statement, capital and shareholders' equity. — FY2025 · publ. 25 February 2026 · source ↗
- ReportedNoninterest expense rose from $65,845 million in 2023 to $69,727 million in 2025, and to $18,627 million in the second quarter of 2026 from $17,183 million a year earlier.Bank of America second-quarter 2026 supplemental information, Form 8-K exhibit 99.3 - quarterly and half-year financial highlights and ROTCE. — Q2 2026 · publ. 14 July 2026 · source ↗
- ReportedThat is the model management set out: an Investor Day target of about 200 basis points of operating leverage every cycle.Bank of America second-quarter 2026 earnings call transcript. — Q2 2026 · publ. 14 July 2026 · source ↗
- ReportedEquities trading revenue rose 70% to $3.6 billion in the second quarter of 2026.Bank of America second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - segment results, returns on allocated capital and business highlights. — Q2 2026 · publ. 14 July 2026 · source ↗
- ReportedThe bank employed about 217,000 people at the end of 2022 and about 213,000 at the end of 2025, and about 211,000 in June 2026.Bank of America Form 10-K for fiscal 2022 - held-to-maturity securities at end-2021 and segment figures for 2020, including the 2020 provision for credit losses. — FY2022 · publ. February 2023 · source ↗
- ReportedThe bank employed about 217,000 people at the end of 2022 and about 213,000 at the end of 2025, and about 211,000 in June 2026.Bank of America Form 10-K for fiscal 2025 - Item 1 business: footprint, clients and employees. — FY2025 · publ. 25 February 2026 · source ↗
- ReportedThe bank employed about 217,000 people at the end of 2022 and about 213,000 at the end of 2025, and about 211,000 in June 2026.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 ↗