Bank of America Reports Jump in Earnings -- Update
April 18 2017 - 7:32AM
Dow Jones News
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.
Trading revenue at Bank of America, excluding an accounting
adjustment, rose 22.5% to $4.029 billion from $3.288 billion in the
first quarter of last year.
Quarterly noninterest expenses were up 0.2% to $14.848 billion,
from $14.816 billion a year ago. Mr. Moynihan has made cost-cutting
a key tenet of his business strategy, and last year he promised to
cut another $5 billion in annual expenses by 2018. To get to that
level, the bank would need to turn in expenses averaging $13.25
billion a quarter.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
April 18, 2017 07:17 ET (11:17 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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