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Bank of America Q2 2017 earnings

By dailymail / Published on Tuesday, 18 Jul 2017 11:05 AM / No Comments

Bank of America, the second-largest U.S. bank by assets under management, posted better-than-expected second-quarter results on Tuesday.

The bank reported earnings per share of 46 cents on revenue of $22.829 billion. Analysts polled by Thomson Reuters expected earnings per share of 43 cents on sales of $21.781 billion.

Bank of America also reported net interest income of $11 billion, below a StretAccount estimate of $11.34 billion.

Revenue from the company’s fixed income trading unit totaled $2.254 billion for the quarter, topping expectations, but still represented a 14 percent year-over-year decline. The bank attributed the decline to “weaker performance in rates and emerging markets relative to a strong year-ago quarter.”

Net charge-offs, meanwhile, decreased by 8 percent to $908 million. Analysts polled by StreetAccount expected net charge-offs to total $975.3 million.

Here’s a side-by-side comparison of Bank of America’s results and Wall Street’s estimates:

  • EPS: 46 cents vs 43 cents expected by analysts polled by Thomson Reuters.
  • Revenue: $22.829 billion vs $21.781 billion expected by Reuters.
  • Net interest income: $11 billion vs $11.34 billion expected by StreetAccount.
  • Fixed income trading: $2.254 billion vs $2.22 billion expected.
  • Net charge-offs: $908 million vs $975.3 million expected.

The bank’s stock has outperformed its peers over the past six months. In that time period, Bank of America shares have risen 9.4 percent. The SPDR S&P Bank exchange-traded fund (KBE), meanwhile, has gained 3.4 percent.

BAC vs KBE, 6-month chart

Source: FactSet

Late last month, the bank hiked its annual dividend to 48 cents a share, or 12 cents per quarter. The increase gave way for Warren Buffett’s Berkshire Hathaway to become the bank’s largest shareholder. Berkshire has warrants to buy 700 million common shares of Bank of America at $7.14 each.

Also last month, Bank of America started to lay off employees in its operations and technology division. The cuts came as the bank tries to reduce costs to boost financial targets set by CEO Brian Moynihan.

Although Bank of America is also hiring, the employees that it is trying to reduce cost more than those who are joining, Moynihan said at a conference last month.

Bank of America is the latest big U.S. bank to report quarterly results. JPMorgan Chase, Citigroup and Wells Fargo all reported last week. Their results beat expectations. Goldman Sachs is also set to report later on Tuesday.