Bank of America reported second-quarter profit of $6.8 billion, up from $5.1 billion a year ago. The bank, the second largest in the U.S. by assets, reported earnings of 63 cents per share, compared with expectations of 57 cents per share, according to analysts surveyed by Reuters.

BofA said quarterly revenue declined to $22.6 billion from $22.8 billion. Analysts had been predicting revenue of $22.3 billion.

“Solid operating leverage and client activity drove earnings higher this quarter,” Chief Executive Officer Brian Moynihan stated. “We grew consumer and commercial loans; we grew deposits.”

Moynihan said the company had initiated a $500 million investment in technology prompted by the Trump administration’s corporate tax cuts.

Morgan Stanley analyst Betsy Graseck, in a note, said Bank of America was on target to meet cost-cutting goals even with the $500 million investment. Graseck said the company’s second-quarter expenses of $13.28 billion were in line with its $53 billion full-year expense target.

The Future of Finance Has Arrived

The pace with which finance functions are employing automation and advanced technologies is quickening. Rapidly. A new survey of senior finance executives by Grant Thornton and CFO Research revealed that, for just about every key finance discipline, the use of advanced technologies has increased dramatically in the past 12 months.

Read More

The company saw its quarterly income tax bill fall to $1.7 billion from $3 billion last year, a 43% decrease. It’s effective tax rate was 20.2%.

Chief Financial Officer Paul Donofrio said the company planned to pay out $26 billion to shareholders over the next twelve months through common dividends and share repurchases.

BofA said its loans and leases increased 2% in the quarter, but less than the amount expected by analysts. Nonperforming loans fell half a billion dollars from the first quarter. 

“Responsible growth continued to deliver as a driver for every area of the company,” Moynihan stated.

U.S. banks have been expected to benefit from tax cuts and from rising interest rates. The Federal Reserve raised its benchmark rate during the quarter for the seventh time since December 2015.

Like most banks, Bank of America has not had to raise the interest rates it pays on deposits in lockstep with the Federal Reserve’s rate moves. Overall, Bank of America paid a rate of 0.38% on U.S. interest-bearing deposits in the second quarter, up from 0.30% in the first quarter.

Photo: Getty Images

, , ,

Leave a Reply

Your email address will not be published. Required fields are marked *