On Wednesday, Bank of America announced its second-quarter results, revealing a mixed performance that saw the bank surpass earnings estimates while falling short in revenue. This marks the only major U.S. bank to report a revenue miss for the second quarter. Here’s a breakdown of the financial results:
The bank reported earnings of 89 cents per share, exceeding analysts' expectations of 86 cents per share as projected by LSEG. However, revenue for the quarter came in at $26.61 billion, which was slightly below the anticipated $26.72 billion.
Bank of America noted that its profit increased approximately 3% year-over-year, reaching $7.12 billion or 89 cents per share, surpassing the expected earnings. The revenue, despite a 4% increase, fell short of analysts' projections, largely due to net interest income (NII) which totaled $14.82 billion but missed StreetAccount estimates by $70 million.
The bank explained that NII, which represents the difference between what banks pay depositors and what they earn from loans and investments, rose approximately 7% during the quarter. This increase was attributed to a rise in deposits and loan growth, although it was tempered by lower interest rates compared to the previous year.
CEO Brian Moynihan highlighted significant trends within the bank, noting that this marked the fourth consecutive quarter of NII growth, driven by an increase in both deposits and loans. He emphasized the resilience of consumers, citing robust spending patterns and strong asset quality, alongside increased utilization rates among commercial borrowers.
In addition to these results, Bank of America experienced solid momentum in its market operations. The firm’s fixed income division generated $3.25 billion in revenue, surpassing the $3.14 billion estimate from StreetAccount. However, equities trading revenue reached $2.13 billion, which slightly fell short of expectations.
Investment banking fees saw a decline of 9%, totaling $1.4 billion. Despite this decrease, the figure still exceeded the $1.27 billion estimate, indicating a relatively strong performance in this area.
Before the earnings announcement on Wednesday, shares of Bank of America had risen approximately 5% since the beginning of the year, reflecting overall investor confidence despite the mixed results reported for the second quarter.
In summary, while Bank of America demonstrated resilience with strong earnings and a notable increase in net interest income, the revenue miss highlights ongoing challenges in the current economic landscape. As the bank navigates these waters, its focus on consumer strength and market momentum will be crucial moving forward.
