Bank of America Reports Higher Earnings

By Rachel Louise Ensign

Bank of America Corp. said Monday that first-quarter profit rose, continuing the string of better-than-expected earnings from the nation's biggest banks.

Quarterly profit at the Charlotte, N.C.-based bank was $6.92 billion, compared with $5.34 billion a year ago. Per-share earnings were 62 cents; analysts had expected 59 cents per share.

First-quarter revenue for the bank run by Chairman and Chief Executive Brian Moynihan came in at $23.125 billion, up from $22.25 billion a year ago. Analysts had expected $23.06 billion.

Bank of America shares, up nearly 1% in 2018, were unchanged at $29.80 in premarket trading.

This quarter is the first time investors have a chance to see exactly how much the recent tax bill is helping the bank's bottom line. The banking industry was one of the biggest beneficiaries of the lower corporate tax rate. While it led to big one-time charges last quarter, the lower rate has started lifting bank earnings this year. Much of that is already in analysts' estimates for the bank's future profits, however.

Earnings also are expected to benefit from interest rates perking up. Rising rates are typically good for banks because they turn a profit on the difference between what they pay on deposits and the rate they collect on loans. In the quarter, the Federal Reserve raised its benchmark rate for a sixth time. Banks have been able to pocket most of the benefits from the rate increases because customers aren't broadly demanding more interest.

Another bright spot for banks with big Wall Street presences like Bank of America: After a number of quarters of disappointing trading revenue, wild price swings for markets in the first quarter mean Wall Street's trading desks are poised to report one of their best three-month periods in years.

While no one has been expecting a new peak in trading like the ones that occurred in 2009 and before the financial crisis, both big Wall Street banks that reported results Friday showed rising trading revenue, with JPMorgan Chase & Co.'s 13% bump leading the way and Citigroup Inc. posting a more modest 1% increase.

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

(END) Dow Jones Newswires

April 16, 2018 07:07 ET (11:07 GMT)

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