Bank of America Reports Higher Earnings
April 16 2018 - 7:42AM
Dow Jones News
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.
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 is starting to lift bank earnings this
quarter. Much of that is already in analysts' estimates for the
bank's future profits, however.
Interest rates also are helping earnings. 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. The rate Bank of America paid on U.S. interest-bearing
deposits was 0.30%, compared with 0.27% in the prior quarter.
Another bright spot: After a number of quarters of disappointing
trading revenue, wild price swings for markets in the first quarter
meant Wall Street's trading desks reported one of their best
three-month periods in years.
Bank of America reported that trading revenue, excluding an
accounting adjustment, rose less than 1% to $4.053 billion from
$4.029 billion in the year-ago quarter. JPMorgan Chase & Co.
and Citigroup Inc., the other two big Wall Street banks that
reported results Friday, also showed rising trading revenue.
Quarterly expenses fell about 1% to $13.897 billion from $14.093
billion a year ago. Chief executive Brian Moynihan has made cost
cutting a key tenet of his business strategy.
Bank of America shares, up nearly 1% in 2018, rose 0.7% to
$30.01 in premarket trading. After a huge run-up following the 2016
presidential election, bank stocks broadly have stalled so far in
2018.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
April 16, 2018 07:27 ET (11:27 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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