Bank of America Flexes Balance-Sheet Strength With $40 Billion Buyback

Management framed the authorization, which takes effect on August 1 and has no stated expiry, as “consistent with our goal of delivering responsible growth and returning excess capital to shareholders.” The new fire-power amounts to about 10 % of the company’s market value and dwarfs the $25 billion plans recently unveiled by JPMorgan and Citigroup, underscoring the importance the bank places on offsetting a still-elevated share count after years of pandemic-era issuance.

Strategically, the timing looks opportune. Bank of America ended the second quarter with a Common-Equity Tier 1 ratio near 11.5 %, well above its 9.5 % regulatory minimum, and finished the Fed’s 2025 stress test with one of the lowest projected loss rates among the U.S. money-center banks. Healthy capital generation from its diversified revenue base means the lender can fund the buyback while still supporting loan growth and a dividend currently yielding about 3.2 %.

For investors, the program offers a double benefit: immediate buying support in an uncertain rate environment and the promise of stronger per-share earnings power as net interest margins stabilize. The key risk is that an aggressive pace of repurchases could limit flexibility if credit costs spike or new Basel III “end-game” rules raise capital requirements further than expected, but management appears comfortable that internal generation will outrun those headwinds. Provided the macro backdrop avoids a hard landing, the authorization materially improves the risk-reward profile for long-term holders.