Profit & Loss

Bank of America Revenue, Earnings Fall in Q2

Still, Bank of America, the nation’s second largest bank, beat analysts' earnings-per-share estimate, as it reduced expenses and grew its loan book.
Christopher HosfordJuly 18, 2016

Bank of America on Monday reported lower quarterly earnings and revenue in its second quarter, but managed to beat profit-per-share estimates.

The nation’s second largest bank by assets reported $4.2 billion in net income, or 36 cents a share, down 17.6% from the $5.1 billion (43 cents a share) logged in the year-ago quarter. Analysts had expected the bank to report earnings per share of 33 cents.

EPS would have been an estimated 6 cents higher than reported but for a debt valuation adjustment of negative $200 million, the bank said.

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Second quarter revenue was $20.4 billion, down 7.1% from the $21 million recorded in the same quarter last year. Bank of America’s shares rose 1.79% to $13.90 as the markets opened for trading Monday morning, although the bank’s shares are still trading almost 20% lower than at the start of the year.

“Our responsible growth strategy led to improved customer and client activity and each of our four business segments reported higher earnings than the year-ago quarter,” said Bank of America CEO Brian Moynihan, in a statement. “We also moved closer to our longer-term performance targets.”

Persistently low interest rates in the United States hurt the bank’s second quarter net interest income, which was down 12% to $9.2 billion from last year’s second quarter. Globally, however, the bank’s sales and trading revenues were up 14% in the quarter, to $4.3 billion.

“BAC benefited from higher bond trading revenue as a result of Brexit, boosting [its] trading income,” said Jerry Braakman, chief investment officer of First American Trust in California, quoted by U.S. News. “Expenses were reduced over 3% (from a year ago).”

“At [Bank of America], we focus on what we can control, and despite low rates and other macro events, we continue to focus on managing our risk, our costs, and our delivery of quality products and customer service,” Moynihan said on the bank’s earnings conferece call. He also pointed out that the bank grew loans $22 billion or approximately 2.5% versus last year and grew deposits more than $66 billion or 6% over that same time period.