Bank of America released second-quarter earnings on Thursday that were bolstered by stronger-than-expected bond trading and investment banking revenues.
The bank said it generated earnings of $ 3.5 billion, or 37 cents a share, exceeding the 27 cents a share expected by analysts polled by Refinitiv. However, revenue of $ 22.5 billion barely beat analyst estimates of $ 22 billion. Shares of the Charlotte, North Carolina-based bank fell 2.4 percent in premarket trading.
Bank of America’s business division helped offset the drag caused by the coronavirus pandemic, although the company’s business results were less surprising than rivals JPMorgan Chase and Goldman Sachs. The lender increased loan loss reserves by $ 4 billion, and lower interest rates decreased interest income by 11%.
Bond trading revenue was up 50% to $ 3.2 billion, and stock trading revenue was up 7% to $ 1.2 billion. Together, the business division exceeded estimates by $ 500 million. Investment banking fees rose 57% to a record $ 2.2 billion in the quarter, beating the estimate of $ 1.67 billion.
In May, Moynihan said he expected business revenue to rise “in the high single digits,” a figure that would pale next to the performance of its rivals. At JPMorgan, business revenue increased 79% to a record $ 9.7 billion, and Goldman produced a 93% increase in business revenue to $ 7.2 billion.
Bank of America is regarded by analysts as the most sensitive of the big banks when it comes to interest rate changes, so they will be interested to hear how the lender is navigating in the low interest rate environment.
On Tuesday, JP Morgan and Citigroup posted earnings that exceeded analysts’ expectations for strong trade and investment banking results, factors that helped Goldman Sachs achieve its highest profit in nearly a decade on Wednesday. Wells Fargo recorded its first loss since the financial crisis in loan loss reserves.
Bank of America shares have fallen 30% this year, compared with a 34% decline in the KBW Bank index.
This is what Wall Street expected:
Earnings: 27 cents a share, a 64% drop from the previous year, according to Refinitiv.
Revenue: $ 22 billion, a 5.3% drop from the previous year.
Net interest margin: 2.04%, according to FactSet.
Business income: fixed income $ 2.63 billion; shares of $ 1.27 billion.
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