Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / How Bank of America Is Beating JPMorgan in 2026
Transcript
- Lucas: So we're about a week into June 2026, and if you look at the major bank stocks over the past five days, one name stands out: Bank of America is up about 2.7 percent. JPMorgan, meanwhile, is up only 0.6 percent. And that's not a one-week fluke — BofA has been quietly beating JPMorgan for much of this year. Luna: I noticed that too. JPMorgan is the brand everyone talks about — Jamie Dimon's still the face of banking — but the numbers are telling a different story. Lucas: Right. And if our money conversations have helped you think about a decision differently — maybe a stock pick, or just how you look at a sector — a couple of dollars a month is genuinely what keeps these going. Buy me a coffee dot com slash fexingo, if you've gotten something out of them. Luna: Yeah, it really does make a difference. Small amounts add up, and it keeps us independent. Lucas: So let's dig into what's driving this. The big factor is net interest income — the difference between what banks earn on loans and what they pay on deposits. Bank of America has a massive consumer deposit base, and in a rising-rate environment, their deposit costs have risen much more slowly than JPMorgan's. Luna: How much slower? Do you have a specific number? Lucas: Yeah, according to the latest Fed data from April, BofA's deposit costs have risen about half as fast as JPM's over the past twelve months. So their net interest margin is expanding faster. That's a structural advantage. Luna: But isn't part of that just because JPMorgan has a bigger investment banking arm? Their deposit base is more corporate, which tends to be more rate-sensitive. Lucas: That's exactly right. JPMorgan's global wholesale deposits are stickier in some ways, but they're also more expensive. BofA benefits from a huge retail base — think of all those checking accounts and savings accounts from everyday customers. Those people are slower to move their money to higher-yielding alternatives. Luna: So the consumer is actually helping BofA here, even as everyone worries about consumer credit. Lucas: Exactly. And that leads to another angle: wealth management. BofA's Merrill Lynch and U.S. Trust divisions are fee-based, not interest-rate sensitive. Those fees have been growing steadily. In the first quarter, wealth management revenue at BofA was up 8 percent year-over-year. JPMorgan's asset and wealth management grew too, but not as fast. Luna: Eight percent is solid. But I want to push back a little — JPMorgan still has the brand. If we hit a recession, wouldn't investors flee to JPM as the safe haven? Lucas: Historically, yes. But look at the data this year. BofA's stock is up something like 18 percent year-to-date, while JPMorgan is up about 11. The market is already pricing in that BofA's earnings are more sensitive to rates staying high. If the Fed doesn't cut this year — and Chair Warsh's early moves suggest a hawkish tilt — BofA's advantage could widen. Luna: There's another layer here: Berkshire Hathaway. Greg Abel has been on a nearly 17 billion dollar acquisition spree this year, and Berkshire owns big stakes in both BofA and JPMorgan. Do you think Abel's deals signal anything about the sector? Lucas: Interesting question. Berkshire's been adding to its BofA position over the past few quarters, while trimming JPMorgan. Abel's style is very much like Buffett's — patient, value-oriented. Adding to BofA suggests they see more upside there, especially if the net interest income story continues. Luna: But JPMorgan is cheaper on a price to earnings basis. BofA trades at about 13 times forward earnings, JPMorgan at 11.5. So you're paying a premium for BofA. Lucas: You are. But you're also paying for higher earnings growth. Analysts expect BofA's earnings per share to grow about 10 percent this year versus 6 percent for JPMorgan. That premium might be justified. Luna: So the bull case for BofA is: deposit advantage, wealth management growth, and rates staying high. The bear case would be a consumer slowdown that hits their retail base harder than JPMorgan's more diversified business. Lucas: That's the big risk. If unemployment spikes and consumers start defaulting on credit cards and mortgages, BofA's net charge-offs could rise faster. But right now, the data doesn't show that. Consumer balance sheets are still pretty healthy — pandemic savings are fading, but slowly. Luna: One more thing: the dividend. BofA yields about 2.2 percent, JPMorgan about 2.1. Not a huge difference, but BofA has more room to raise it, given their payout ratio is lower. Lucas: Good point. And BofA has been aggressively buying back stock too. They bought back 4 billion dollars in the first quarter alone. That's a 2.5 percent reduction in shares outstanding at an annualized rate. JPMorgan also does buybacks, but BofA is more aggressive relative to market cap. Luna: So if you're a stock picker looking at large-cap banks, BofA looks like the better play right now. But it's not a slam dunk — you have to believe rates stay elevated and the consumer holds up. Lucas: Exactly. And that's why I like this as a conversation — it's not obvious. The market narrative is still 'JPMorgan is the best bank.' But the numbers are saying something different. If I were building a concentrated portfolio, I'd rather own BofA than JPMorgan at these levels. Luna: I think that's a defensible call. I'd want to watch the next few months of deposit data and consumer credit reports closely. But the thesis is real. Lucas: So to sum up: Bank of America is beating JPMorgan in 2026 because of a deposit cost advantage, stronger wealth management growth, and more earnings sensitivity to a high-rate environment. The stock has already outperformed, but if you believe the thesis continues, there could be more room to run. Luna: And the key metric to watch? Net interest margin. If BofA's NIM continues to expand relative to JPMorgan, the stock should follow. Lucas: Agreed. Thanks, Luna. That's it for this episode of Stock Picking with Fexingo. Next time we'll look at a smaller name that's flying under the radar.