SKN | Bank of America Maintains Its 2027 NII Growth Outlook Above 8% Despite $1.2 Billion Compliance Charge

Key Takeaways:

• Bank of America recorded a $1.2 billion regulatory settlement charge in its third-quarter results, reducing reported diluted EPS to $0.91 from $1.04 a year earlier.
• Net interest income increased 8% year over year to $16.4 billion, with management expecting growth of at least 8% again in 2027.
• CFO Alastair Borthwick said the regulatory order carries no asset cap and that the technology and personnel required for remediation are already incorporated into the bank’s operating cost base.
• The bank’s CET1 ratio eased to 10.9%, while regulators require further remediation and independent reviews of its anti-money-laundering controls.

Bank of America is seeking to preserve its earnings trajectory while addressing one of the most consequential compliance actions in its recent history. Its third-quarter results absorbed a $1.2 billion regulatory settlement charge, but management maintained its outlook for net interest income growth in 2027. The distinction matters: the penalty creates a substantial governance and execution challenge, while the bank’s underlying interest-income outlook remains supported by lending, deposits and fixed-rate asset repricing.

Regulatory Charge Reduces Reported Earnings, but NII Continues to Grow

The settlement charge reduced third-quarter net income to $6.9 billion and diluted earnings per share to $0.91, compared with $8.3 billion and $1.04 a year earlier. Excluding the charge, Bank of America reported adjusted net income of $8.1 billion and adjusted EPS of $1.08. These adjusted figures exclude the regulatory expense and should be distinguished from the bank’s reported results.

Revenue increased 3% to $30 billion, while net interest income advanced 8% to $16.4 billion. Higher loan and deposit balances, Global Markets activity and fixed-rate asset repricing supported the increase. Performance across the bank was not uniform, however: fixed income, currencies and commodities revenue declined 17% to $2.6 billion, reflecting weaker trading results.

CFO Says Regulatory Order Does Not Impose an Asset Cap

During the earnings call, Chief Financial Officer Alastair Borthwick said the regulatory order does not impose an asset cap and would not crowd out other business priorities. He explained that the bank had already invested in the technology and personnel needed to address the deficiencies, with those resources incorporated into its ongoing cost base.

That is management’s assessment of the operational impact, not an indication that the regulatory obligations have disappeared. The enforcement actions concern deficiencies in transaction monitoring, suspicious-activity reporting and customer due diligence. The consent order requires Bank of America to work with a third party to review historical transactions and undergo independent assessments of its monitoring, due-diligence and data-governance frameworks. For a global institution, demonstrating sustained improvements in financial-crime controls is essential to maintaining confidence among international counterparties.

Bank Maintains Its 2027 Net Interest Income Growth Target

Management expects full-year 2026 net interest income growth of approximately 8%, followed by growth of 8% or more in 2027. The outlook reflects anticipated loan and deposit expansion alongside continued repricing of fixed-rate assets. It also assumes three 25-basis-point interest-rate increases through June 2027, making the forecast sensitive to the actual rate path and balance-sheet trends. Borthwick additionally said the bank expects to return to positive operating leverage in the fourth quarter.

Capital Strength and Compliance Execution Remain Central

Bank of America’s standardized CET1 ratio declined to 10.9% from 11.2% in the previous quarter, although the bank reported that it remained well above the regulatory minimum. It returned $8.3 billion to shareholders during the quarter through dividends and share repurchases. For international investors and clients with cross-border banking relationships, the central consideration is whether the bank can preserve capital flexibility while completing the required compliance work and sustaining earnings growth.

The next test will be evidence that remediation is durable, operating leverage is recovering and the 2027 income outlook remains achievable under changing interest-rate conditions. For a confidential discussion regarding your international banking exposure and cross-border wealth structure, contact our senior advisory team.