Bank of America tops analysts’ expectations amid higher interest rates
The bank reported a 19% increase in earnings to $7.41 billion, or 88 cents per share, from $6.25 billion, or 73 cents per share, in the prior year. The 11% increase in revenue to $25.33 billion was driven by a 14% increase in net interest income to $14.2 billion, which matched the expectations of analysts polled by FactSet.
CEO Brian Moynihan stated in the press release, “We continue to see a healthy U.S. economy that is growing at a slower rate, with a resilient job market.” Continued organic client growth and client engagement across all of our businesses complemented the positive effects of higher interest rates.
In premarket trading, Bank of America shares rose by less than 1 percent.
The company’s Wall Street operations helped it exceed quarterly revenue expectations. Fixed income trading revenue increased 18% to $2.8 billion, exceeding the $2.77 billion forecast, while equity trading revenue decreased 2% to $1.6 billion, exceeding the $1.48 billion forecast.
It was anticipated that Bank of America would be one of the top beneficiaries of rising interest rates this year, but that has not transpired. As loan and deposit growth has slowed, the company’s net interest income, one of a bank’s primary revenue generators, has come under scrutiny. Last week, competitor JPMorgan Chase reported a much larger increase in net interest income, which contributed to a 67% increase in quarterly profit.
Prior to Tuesday, BofA shares had declined approximately 11% in comparison to the approximately 20% decline of the KBW Bank Index.
This month, the Consumer Financial Protection Bureau announced that it had fined the Charlotte, North Carolina-based bank for consumer abuses including the creation of fake accounts and the charging of fraudulent fees. Moynihan may be asked by analysts whether the problems have been resolved.
Amid rising interest rates, JPMorgan, Citigroup, and Wells Fargo all posted earnings that exceeded analyst expectations on Friday. Additionally, Morgan Stanley reported earnings on Tuesday. Wednesday, Goldman Sachs concludes its large bank earnings.