Bank Of America Q2 Profit Surges; Revenue Up 3% Excl. Prior Year Gain

Bank of America Corp. (BAC) reported that its second-quarter earnings per share was up 43% year-over-year to $0.63. On average, 20 analysts polled by Thomson Reuters expected the company to report profit per share of $0.57 for the quarter. Analysts’ estimates typically exclude special items. Net income to shareholders increased to $6.5 billion from $4.8 billion, driven by improved operating performance and the benefits of tax reform .

Second-quarter revenue, net of interest expense, decreased 1% to $22.6 billion. Excluding the gain in the prior year quarter, revenue was up 3%. Net interest income increased 6%, to $11.7 billion, reflecting benefits from higher interest rates, as well as loan and deposit growth. Non-interest income decreased 7%, including the $793 million prior-year gain, to $11.0 billion. Total revenue, net of interest expense on a fully taxable-equivalent basis, was $22.8 billion compared to $23.1 billion, prior year. Analysts expected revenue of $22.27 billion for the quarter.

For the second-quarter, provision for credit losses increased $101 million to $827 million. Non-interest expense declined 5%, to $13.3 billion. Excluding the data center impairment charge in the prior year quarter, non-interest expense was down 3%. Average deposit balances rose 3%, to $1.3 trillion. The company said its overall credit quality remained strong across both the consumer and commercial portfolios. The company returned $6.2 billion to shareholders in second-quarter through common dividends and share repurchases.

For Consumer Banking Segment, net income increased 42%, to $2.9 billion, driven by solid operating leverage of 9%. Revenue increased 8%, to $9.2 billion.

“Solid operating leverage and client activity drove earnings higher this quarter. Responsible growth continued to deliver as a driver for every area of the company. We grew consumer and commercial loans; we grew deposits; we grew assets within our Merrill Edge business; we generated more net new households in Merrill Lynch; and we supported more institutional client activity — all of this while we continued to invest in our businesses and began an additional $500 million technology investment, which we intend to spend over the next several quarters, due to the benefits we received from tax reform. Even while making investments in people, technology, new markets and real estate, we managed to lower expenses again this period,” said Brian Moynihan, CEO.

by RTTNews Staff Writer

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