Bank of America Misses Estimates but the Stock Rises on Upbeat Guidance

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Photograph by JB Reed/Bloomberg News

Bank of America

shares were rising Monday after the bank posted mixed second-quarter results but said net interest income could increase by as much as $1 billion in the next quarter.

Bank of America

(ticker: BAC) reported earnings of $6.2 billion, or 73 cents a share, missing Wall Street forecasts. Analysts surveyed by FactSet expected the bank to earn 75 cents a share in the second quarter. A year earlier, Bank of America earned a profit of $1.03.

Revenue increased 6% to $22.7 billion, in line with consensus estimates. Trading revenue in the second quarter, Bank of America said, rose 17% to $4.2 billion, including net debit valuation adjustment gains of $158 million.

Net interest income, or NII, jumped 22% to $12.4 billion thanks to higher interest rates and loan growth, the bank said. Noninterest income, however, declined 9%, reflecting weaker capital markets, it added.

“Solid client activity across our businesses, coupled with higher interest rates, drove strong net interest income growth and allowed us to perform well in a weakened capital markets environment,” said CEO Brian Moynihan in a press release.

The bank expects net interest income to increase by between $900 million and $1 billion during the third quarter from the second quarter, said Chief Financial Officer Alastair Borthwick in a call with investors on Monday. Management believes it could grow even faster in the fourth quarter on a sequential basis.

“The way we think about those NII increases, given the expense discipline that we have, is we expect the…


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