Will BAC Q1 2026 net charge-off ratio be 50 basis points or higher?
Current Prediction
Why This Question Matters
Q4 2025 NCO ratio fell to 44bp, a two-year low. The Stress Scanner threshold for concern is 60bp for 2 consecutive quarters. A Q1 reading above 50bp would indicate the credit cycle is turning and break the improving trajectory. Low probability but high information value if it occurs.
Prediction Distribution
Individual Predictions(9 runs)
Q4 44bp + typical Q1 seasonal tick-up of 3-5bp = ~47-49bp base case. Reaching 50bp requires either the seasonal uptick to run higher than historical or an acceleration in consumer credit. Both plausible but not base case.
Management guided stability and credit signals are improving across multiple metrics. The trajectory is clearly downward. Probability of a sudden Q1 reversal is low.
Consumer delinquencies stable but Q1 historically sees post-holiday card losses tick up. If any single commercial loss event hits, NCOs could spike. ~25%.
Base rate + seasonal + improvement trajectory = ~20-25%.
Credit is cycling down from late 2024 peak. No reason to expect Q1 reversal.
Seasonal Q1 tick-up plus any single large commercial loss could push NCO to 50bp. ~25%.
Q4 44bp + seasonal likely 47-49bp.
Improving trajectory.
Low probability of reversal.
Resolution Criteria
Resolves YES if BAC's Q1 2026 net charge-off ratio (annualized) as reported in the earnings release is 0.50% (50 basis points) or higher. Resolves NO if below 0.50%.
Resolution Source
BAC Q1 2026 earnings press release
Source Trigger
Net charge-off ratio above 50bp for 2+ quarters
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