Bank of America reported first-quarter earnings on Tuesday that beat analysts’ profit and revenue estimates as interest income and investment banking came in better than expected.
Here’s what the company reported:
- Earnings: 83 cents per share adjusted, versus expected 76 cents, according to LSEG
- Revenue: $25.98 billion vs. expected $25.46 billion
The bank said profit fell 18% to $6.67 billion, or 76 cents per share; Excluding a $700 million FDIC valuation, profit was 83 cents per share. Revenue fell 1.6% to $25.98 billion as net interest income fell from a year ago.
Net interest income, which is the difference between what the company earns from loans and investments and what it pays customers for their deposits, was $14.19 billion, beating StreetAccount’s estimate of $14.19 billion $13.93 billion.
The bank’s interest income was a “mild positive surprise,” although it’s unclear whether that means the metric will improve sooner than expected, Wells Fargo analyst Mike Mayo said in a research note on Tuesday.
The bank’s total deposits of $1.95 trillion rose about 1% from the fourth quarter, while loans were essentially flat at $1.05 trillion.
“I was not impressed that deposits and loans remained flat,” David Wagner, portfolio manager at Aptus Capital Advisors, said in an email. “The only areas in which BAC has performed well have been in areas where other banks have shown strength.”
Bank of America CFO Alastair Borthwick told analysts in a conference call on Tuesday that NII would likely fall to about $14 billion in the second quarter as asset management revenue and market interest rates fell. However, it could grow in the second half of the year, he said.
NII has declined in recent quarters as funding costs have increased along with the rise in interest rates.
The bank’s shares fell more than 3%.
Bank of America’s share price decline on Tuesday had more to do with the rise in the 10-year Treasury yield than with first-quarter results, according to KBW analyst David Konrad. Shares of many banks have been sensitive to returns over the past year as rising yields caused some bond and loan holdings to lose value.
Investment banking revenue rose 35% to $1.57 billion, topping estimates of $1.36 billion and following a similar rise at peers such as Goldman Sachs And JPMorgan Chase.
It’s also well above forecast from Borthwick, who last month expected analysts to expect investment banking revenues to rise 10% to 15% from a year earlier.
The bank’s trading business also exceeded expectations. Fixed income revenue fell 3.6% to $3.31 billion, slightly beating the estimate of $3.24 billion. Earnings from equities rose 15% to $1.87 billion, compared with the estimate of $1.84 billion.
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2024-04-16 16:29:50
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