Bank of America Stock Is Down. Earnings Weren't All Good. - Barron's

Shares of Bank of America have gained nearly 32% so far this year.
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Bank earnings season continues with Bank of America, the latest of the big banks to deliver a mixed bag of results.

Bank of America, the second-largest bank by assets in the U.S., saw revenue decline 4% to $21.5 billion from the year-ago quarter due to the impact of low interest rates and a drop in trading activity. Analysts surveyed by FactSet were expecting revenue of $21.8 billion.

Earnings, however, topped estimates with Bank of America seeing profit of $9.2 billion, or $1.03 per share, well ahead of the 77 cents analysts projected and the 37 cents per share the bank earned in the year-ago quarter. Results this quarter were helped by a $2.2 billion release of reserves the bank set aside last year in anticipation of a wave of defaults due to the economic impact of the coronavirus pandemic.

“We delivered solid earnings and returned more capital to shareholders during the quarter as we moved to a more open economy,” chief executive Brian Moynihan said in a statement, referring to the $5.8 billion returned to shareholders via dividends and buybacks.

Bank of America results come after JPMorgan Chase (JPM) and Goldman Sachs (GS) reported on Tuesday. While both banks easily topped estimates, shares tumbled as investors were looking for new growth catalysts after the expected drop in trading revenue.

At Bank of America, total trading revenue fell 19% from the year-ago quarter as fixed-income trading revenue fell 38% and equities trading increased 33%.

With trading revenue down, as expected by Wall Street, more attention is being paid to loan growth. Average loans and leases at Bank of America were $889 billion, 11% year over year but 2% higher from the previous quarter.

“Consumer spending has significantly surpassed prepandemic levels, deposit growth is strong, and loan levels have begun to grow,” Moynihan said.

Bank of America shares were down more than 2.2% in premarket trading.

Citigroup (C) and Wells Fargo (WFC) also report results Wednesday. Morgan Stanley (MS) reports before the bell on Thursday.

Write to Carleton English at carleton.english@dowjones.com

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