Bank of America Corp.’s stock traders posted a record quarter as the company reaped the benefits of volatile markets and net interest income topped analysts’ estimates.
Revenue from equity trading rose 17% to US$2.18 billion in the first three months of the year, the company said in a statement Tuesday. That helped Bank of America beat analysts’ estimates for per-share earnings. Trading of fixed income, currencies and commodities came in close to expectations, bringing in $3.46 billion.
The bank’s sales and trading unit delivered its 12th consecutive quarter of year-over-year revenue growth, Chief Executive Officer Brian Moynihan said in the statement. “Our business clients have been performing well, and consumers have shown resilience, continuing to spend and maintaining healthy credit quality.”
The Charlotte, North Carolina-based bank said that net interest income, a key source of revenue for the company, rose 2.9% to $14.4 billion. Analysts had expected a 2.3% increase for NII, the revenue collected from loan payments minus what depositors are paid. The bank also kept its forecast for quarterly NII to reach $15.5 billion to $15.7 billion on a fully taxable-equivalent basis by the end of the year.
Bank of America’s results offer another look at how the biggest U.S. banks fared in the early days of U.S. President Donald Trump’s second term. Investors are also eager for details on the national economy from executives whose firms cater to large swaths of American consumers and businesses.
JPMorgan Chase & Co. and Goldman Sachs Group Inc. also reported earnings that beat analysts’ estimates, with executives pointing to a surge in trading activity boosting results. Both banks expect the momentum in trading to continue amid an uncertain macroeconomic backdrop.
The first quarter saw steady trading volumes as investors repositioned around Trump’s new policies and changing geopolitics.
Shares of Bank of America, rose 2.2% to $37.46 at 7:30 a.m. in early New York trading. They’ve gained 2% in the 12 months through Monday, less than the 18% increase in the S&P 500 Financials Index.
Revenue beats
Bank of America’s top-line revenue came in at $27.4 billion, trouncing the analyst consensus of $25.8 billion. Adjusted earnings per share totaled 90 cents, also a beat.
Investment-banking revenue fell 1.4%, roughly in line with analysts expectations amid a slower return to meaningful dealmaking. Fees for advising on mergers and acquisitions rose 2.9% to $384 million, and revenue from equity and debt issuance decreased 25% and increased 6.4% respectively.
The second-largest U.S. bank took a $1.48 billion provision for credit losses, less than the $1.53 billion analysts had predicted.
The company’s loan balances rose to $1.1 trillion at the end of the first quarter, up 5.9% from a year earlier and more than analysts’ estimates of just under $1.1 trillion. Lending has been a key focus for investors, with lower interest rates expected to spur borrowing as loans become less costly.
Bank of America’s non-interest expenses rose 3.1% from a year earlier to $17.8 billion. Charges and costs are another focal point for investors, with persistent inflation putting pressure on spending. Analysts had expected a 2.3% increase to $17.6 billion.
With assistance from Keith Gerstein.
Katherine Doherty, Bloomberg News
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