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A branch of the Bank of America in San Francisco.
David Paul Morris / Bloomberg
bank of America
posted strong first-quarter results on Thursday, but stock plummeted as investors focused on the bank’s Covid-19-related costs and weaker-than-expected net interest income and credit growth.
Revenues at Bank of America (ticker: BAC) more than doubled from a year ago to $ 8.1 billion, up from $ 4 billion in the first quarter of last year. The bank posted a profit of 86 cents a share on revenue of $ 22.8 billion, surpassing analysts’ profit of 66 cents a share on revenue of $ 21.9 billion.
Shares fell 4% in recent trading, to $ 38.28, after a whopping 1.2% rise for the market. The
S&P 500
was up 0.7%.
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JPMorgan Chase
(JPM) and
Wells Fargo
(WFC), which reported earlier this week, Bank of America’s results were helped by an improving economic backdrop and the release of reserves accumulated last year to cover potential credit losses. The bank released $ 2.7 billion from its reserves, compared to $ 3.6 billion as of last year.
But while the economic backdrop is much better than feared, customers are still not taking out loans. Bank of America saw its consumer bank’s revenue drop by $ 1.1 billion to $ 8.1 billion due to lower interest rates and credit balances.
Net interest income was $ 10.2 billion, down from $ 12.1 billion in the same quarter a year ago as the bank, like its peers, is still impacted by low interest rates, making the difference between what earnings from lending and deposits become smaller. .
“As low interest rates continued to challenge earnings, credit costs improved and we believe advances in the health crisis and economy point to an accelerated recovery,” CEO Brian Moynihan said in a statement.
Weaker net interest income was offset by a 19% increase in non-interest income, which rose to $ 12.6 billion, driven by strong capital markets and investment banking activities. Bank of America posted record investment banking fees of $ 2.2 billion and record equity fees of $ 900 million, an increase of 218%. Meanwhile, fixed income trading was up 22% to $ 3.3 billion, while stock trading was up 10% to $ 1.8 billion.
The bank also saw non-interest expenses rise 15% to $ 15.5 billion as a result of increased Covid-19 and compensation-related costs.
Citigroup
(C) also reported results while Thursday
Morgan Stanley (MS)
reports Friday. JPMorgan Chase,
Goldman Sachs
Group (GS) and Wells Fargo started banking revenues on Wednesday.
Write to Carleton English at [email protected]