The Return GapNarrow moat

Bank of America (BAC) — moat facet

Bank of America pays less for deposits and holds less capital than JPMorgan, and still earns six points less on its equity, because it spends more and sells less.

The central fact about Bank of America's moat is a gap. Return on average tangible common equity was 14.22% in 2025, 12.94% in 2024 and 13.45% in 202312. JPMorgan's was 20%, 22% and 21%3. Bank of America clears its cost of equity; it does not come close to its strongest rival.

Bank of America vs JPMorgan, 2025CET1 ratio, BofA (%)11.4CET1 ratio, JPM (%)14.6Efficiency, BofA (%)61.65Overhead, JPM (%)52Net charge-offs, BofA (%)0.50Net charge-offs, JPM (%)0.74Bank of America 10-K and Q4 2025 release; JPMorgan 10-K FY2025
Less capital, lower losses, higher costs.

The easy explanations do not fit. Bank of America's deposits cost less than JPMorgan's in 2025, about 1.74% against 1.80%45. It held less capital, a CET1 ratio of 11.4% against 14.6%67, which should raise return on equity, not lower it. Its net charge-off rate was lower, 0.50% against 0.74%89.

What is left is cost and revenue mix. Bank of America's efficiency ratio was 61.65% against JPMorgan's 52% overhead ratio1011, and it earned total net revenue of about 5.7 cents per dollar of average deposits against JPMorgan's 7.3 cents12.

Those are things management can change, and they are changing. ROTCE was 17.03% in the second quarter of 202613, the efficiency ratio 59%14, and at its November 2025 investor day the bank set a medium-term target of 16% to 18%15. JPMorgan reported 29% in the same quarter, or 23% excluding significant items16.

The gap has been closing on the bank's own measures. Tangible book value per share rose from $24.28 at the end of 2023 to $28.73 at the end of 2025 and $29.37 in June 2026171819, while the share count fell. Return on common equity, which includes goodwill, was 12.7% in the second quarter of 202620, above the 10% hurdle for once on that measure too.

Return on assets tells the same story in smaller numbers. It was 0.83% in 2023, 0.82% in 2024 and 0.89% in 20252122, and 1.03% in the second quarter of 202623. Crossing 1% on a sustained basis would be the balance-sheet version of reaching the ROTCE target.

This facet is narrow and widening. The return gap is the moat's real test; ROTCE of at least 16% for a full year would say the franchise was finally being turned into returns, and a fall back below 14% would say it was not.

Moat trajectory: Widening

ROTCE 12.94% (2024) to 14.22% (2025) to 17.03% (Q2 2026).

The number that tests this moat
Reported
ROTCE, latest quarter
17.03% (Q2 2026) vs 13.61% a year earlier

The return the franchise produces; a fall back below 14% would say the improvement was a good year, not a new level.

Source: Bank of America Q2 2026 supplemental information ↗
Aspects of the moat
DIG DEEPER 01
Sixty-One Point Seven Percent
Bank of America spends nearly ten cents more of each revenue dollar than JPMorgan, and that gap, not funding, is most of the return gap.
DIG DEEPER 02
Fifty Million Digital Users and 3,530 Branches
Fifty million Bank of America clients bank digitally and 70% of sales start there, which is why its consumer bank runs at a 51% efficiency ratio.
DIG DEEPER 03
Eleven Point Four Against Ten
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.
DIG DEEPER 04
Returning More Than It Earns
Bank of America has retired nearly a third of its shares since 2015 and returned all of its 2025 earnings, on capital it cannot keep spending.
⚠ Threats to the moat
⚠ THREAT 01
A Target Above Anything It Has Earned Recently
Bank of America met its last ten-year plan and has set a new target above anything it earned between 2022 and 2025.
⚠ THREAT 02
JPMorgan Holds More Capital and Still Earns More
JPMorgan carries three points more capital than Bank of America and still earns six points more on it.
References
  1. ReportedReturn on average tangible common equity was 14.22% in 2025, 12.94% in 2024 and 13.45% in 2023.
    Bank of America Form 10-K for fiscal 2025 - financial highlights, income statement, capital and shareholders' equity. — FY2025 · publ. 25 February 2026 · source ↗
  2. ReportedReturn on average tangible common equity was 14.22% in 2025, 12.94% in 2024 and 13.45% in 2023.
    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 ↗
  3. ReportedJPMorgan's was 20%, 22% and 21%.
    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 ↗
  4. Moat Explorer calcBank of America's deposits cost less than JPMorgan's in 2025, about 1.74% against 1.80%.
    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 - deposits, deposit cost and the securities book. — 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.
  5. ReportedBank of America's deposits cost less than JPMorgan's in 2025, about 1.74% against 1.80%.
    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 ↗
  6. ReportedIt held less capital, a CET1 ratio of 11.4% against 14.6%, which should raise return on equity, not lower it.
    Bank of America fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1. — Q4 2025 · publ. 14 January 2026 · source ↗
  7. ReportedIt held less capital, a CET1 ratio of 11.4% against 14.6%, which should raise return on equity, not lower it.
    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 ↗
  8. ReportedIts net charge-off rate was lower, 0.50% against 0.74%.
    Bank of America fourth-quarter 2025 supplemental information, Form 8-K exhibit 99.3 - net charge-offs for 2024 and 2025. — Q4 2025 · publ. 14 January 2026 · source ↗
  9. ReportedIts net charge-off rate was lower, 0.50% against 0.74%.
    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 ↗
  10. ReportedBank of America's efficiency ratio was 61.65% against JPMorgan's 52% overhead ratio, and it earned total net revenue of about 5.7 cents per dollar of average deposits against JPMorgan's 7.3 cents.
    Bank of America Form 10-K for fiscal 2025 - average balance sheet, deposits, net interest income and rate sensitivity. — FY2025 · publ. 25 February 2026 · source ↗
  11. ReportedBank of America's efficiency ratio was 61.65% against JPMorgan's 52% overhead ratio, and it earned total net revenue of about 5.7 cents per dollar of average deposits against JPMorgan's 7.3 cents.
    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 ↗
  12. Moat Explorer calcBank of America's efficiency ratio was 61.65% against JPMorgan's 52% overhead ratio, and it earned total net revenue of about 5.7 cents per dollar of average deposits against JPMorgan's 7.3 cents.
    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 - deposits, deposit cost and the securities book. — 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.
  13. ReportedROTCE was 17.03% in the second quarter of 2026, the efficiency ratio 59%, and at its November 2025 investor day the bank set a medium-term target of 16% to 18%.
    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 ↗
  14. ReportedROTCE was 17.03% in the second quarter of 2026, the efficiency ratio 59%, and at its November 2025 investor day the bank set a medium-term target of 16% to 18%.
    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 ↗
  15. Third-party estimateROTCE was 17.03% in the second quarter of 2026, the efficiency ratio 59%, and at its November 2025 investor day the bank set a medium-term target of 16% to 18%.
    Kitco (Reuters), Bank of America raises return target at its investor day - ROTCE 16-18%, trading share 7.6% against a 9% target, six new markets. — November 2025 · publ. 5 November 2025 · source ↗
  16. ReportedJPMorgan reported 29% in the same quarter, or 23% excluding significant items.
    JPMorgan Chase second-quarter 2026 earnings release, exhibit 99.1 - ROTCE and overhead ratio. — Q2 2026 · publ. July 2026 · source ↗
  17. ReportedTangible book value per share rose from $24.28 at the end of 2023 to $28.73 at the end of 2025 and $29.37 in June 2026, while the share count fell.
    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 ↗
  18. ReportedTangible book value per share rose from $24.28 at the end of 2023 to $28.73 at the end of 2025 and $29.37 in June 2026, while the share count fell.
    Bank of America fourth-quarter 2025 earnings release, Form 8-K exhibit 99.1. — Q4 2025 · publ. 14 January 2026 · source ↗
  19. ReportedTangible book value per share rose from $24.28 at the end of 2023 to $28.73 at the end of 2025 and $29.37 in June 2026, while the share count fell.
    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 ↗
  20. ReportedReturn on common equity, which includes goodwill, was 12.7% in the second quarter of 2026, above the 10% hurdle for once on that measure too.
    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 ↗
  21. ReportedIt was 0.83% in 2023, 0.82% in 2024 and 0.89% in 2025, and 1.03% in the second quarter of 2026.
    Bank of America Form 10-K for fiscal 2025 - financial highlights, income statement, capital and shareholders' equity. — FY2025 · publ. 25 February 2026 · source ↗
  22. ReportedIt was 0.83% in 2023, 0.82% in 2024 and 0.89% in 2025, and 1.03% in the second quarter of 2026.
    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 ↗
  23. ReportedIt was 0.83% in 2023, 0.82% in 2024 and 0.89% in 2025, and 1.03% in the second quarter of 2026.
    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 ↗
Sources
Generated September 25, 2026