Bank of America said Tuesday that revenue and earnings in the second quarter beat estimates, supported by higher fees in both investment banking and asset management.
Bank of America reported:
- Earnings: $0.83 per share vs. estimate of $0.80 per share.
- Revenues: $25.54 billion vs. estimate of $25.22 billion.
The bank said profit fell 6.9% compared to the same period last year, to $6.9 billion, or $0.83 per stock, as net interest income declined due to higher interest rates. Revenues rose about 1% to $25.54 billion.
Investment banking fees increased
The firm benefited from a 29% increase in investment banking fees to $1.56 billion, exceeding StreetAccount’s estimate of $1.51 billion. Asset management fees increased 14% to $3.37 billion, supported by the increase in equity market values, which helped the firm’s wealth management division show an increase of around 6.3% in revenues to $5.50 billion, matching StreetAccount’s estimate.
Net interest income
Net interest income fell 3% to $13.86 billion, also matching StreetAccount’s estimate.
However, new guidance on this measure, which is called NII, gave investors confidence that a recovery is underway. NII is one of the main ways banks make money.
This measure, which is the difference between what a bank earns on loans and what it pays depositors for their savings, is projected to amount to about $14.5 billion in the fourth quarter of this year, Bank of America said in a slide presentation. This confirms what executives had previously told investors, specifically that net interest income would bottom out in the second quarter.
Market reactions and comparison with other banks
Bank of America stocks rose 2% in pre-market trading, supported by the net interest income forecast.
In the previous week, JPMorgan Chase, Wells Fargo, and Citigroup all beat revenue and earnings expectations, and Goldman Sachs continued the run on Monday, thanks to a pick-up in activity on Wall Street.
