Bank of America Reports Jump in Earnings

By Rachel Louise Ensign

Bank of America Corp. said its first-quarter profit rose as the lender started to see the benefits of a long-awaited rise in interest rates.

Quarterly profit at the Charlotte, N.C.-based bank was $4.86 billion, up from $3.47 billion a year ago. Per-share earnings were 41 cents. Analysts had expected 35 cents a share.

Revenue was $22.25 billion, up from $20.79 billion a year ago. On an adjusted basis, revenue of $22.45 billion compared with analysts' expected figure of $21.61 billion.

The bank's fortunes are improving after heavy loan losses from the financial crisis and debilitating legal fees in its wake. Bank of America shares have risen 61% over the past year, among the best of the six largest U.S. banks, buoyed by the prospect of a stronger economy and an election result that led to optimism about regulatory and tax relief. For a period earlier this year, the stock traded above its book value for the first time since the financial crisis.

The bank, run by Chairman and CEO Brian Moynihan, has been expected to get a bigger boost from rising interest rates than peers. Most consumer banks' lending businesses benefit from a Federal Reserve rate increase. But Bank of America's balance sheet -- full of deposits and mortgage securities -- is particularly well-positioned. The lender has said it expects net interest income to increase about $600 million a quarter starting with the period announced Tuesday, in part because rates have started to rise.

Still, there are signs that investors are starting to question whether bank stocks rallied too far after the election. For instance, J.P. Morgan Chase & Co. and Citigroup Inc. shares fell last week despite the banks posting sharp increases in first-quarter profit.

Write to Rachel Louise Ensign at rachel.ensign@wsj.com

(END) Dow Jones Newswires

April 18, 2017 07:05 ET (11:05 GMT)

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