bank of americaThe second-largest U.S. lender posted higher sales and bottom line profits in the first quarter, helped by equity sales and trading.
Here’s what the company reported:
Earnings per share: LSEG $1.11 per share vs. $1.01 expected Earnings: $30.43 billion vs. $29.93 billion expected
The bank announced Wednesday that net income rose 17% to $8.6 billion, or $1.11 per share, the highest EPS for Bank of America in nearly 20 years.
Revenue increased 7.2% to $30.43 billion due to higher net interest income, higher trading income, and higher investment banking and asset management fees.
Stock trading contributed to the rally as the geopolitical environment roiled stock markets. The business’ revenue rose 30% to $2.83 billion, beating street estimates by about $350 million and propelling the bank’s trading business to its best quarter in 15 years.
The investment banking division also beat expectations, increasing 21% to $1.8 billion, compared to the street consensus of $1.73 billion.
Net interest income, a measure of loan profitability, rose 9% to $15.9 billion, beating estimates of $15.67 billion, according to Street Accounts. This was due to growth in loan and deposit balances, fixed rate asset repricing, and market activity.
Bank of America had previously expected net interest income to grow 5% to 7% this year, but on Wednesday raised that outlook to 6% to 8% after the company’s better first-quarter results.
In a sign that conditions for bank borrowers are not deteriorating, the company recorded a $1.3 billion provision for credit losses in the quarter, which was lower than the $1.5 billion provision in the year-ago period and about $190 million less than expected.
Bank of America CEO Brian Moynihan told CNBC on Wednesday that “the company is doing well right now. Consumers are spending, credit quality is very good and improving, and we’re seeing a little bit more physical usage among business customers.” “We’re all facing the same uncertainties, but right now U.S. businesses and consumers are doing well, and frankly, U.S. global businesses are also doing pretty well.”
Still, like rival Goldman Sachs, the bank’s bond revenue fell short of expectations. The business had revenue of about $3.5 billion, missing StreetAccount estimates by about $330 million.
The net charge-off rate, which measures the percentage of total loans deemed uncollectible, improved by 6 basis points to 0.48% during the quarter. The company’s Consumer Banking and Global Wealth divisions each increased net income by more than 20%.
Return on tangible common capital, a measure of profitability, was 16%, an improvement of more than 200 basis points.
—CNBC’s Hugh Song and Raya Neelakandan contributed to this report.
Correction: Bank of America previously said it expected net interest income growth to be between 5% and 7% this year. A previous version of this article incorrectly stated the range. Additionally, the company’s Consumer Banking and Global Wealth divisions each increased net income by more than 20%. In previous versions, growth metrics were listed incorrectly.
