Bank of America’s Shares Rise Thanks to a Strong Earnings Report

The bank increased its revenue and profit during the second quarter.

This week, Bank of America released its second-quarter earnings report. The earnings report exceeded investor expectations, largely thanks to its retail banking strength. Bank of America’s shares rose more than 1% midday.  

Bank of America has performed well during the first half of 2019. The company’s shares are up nearly 20% year to date. CEO Brian Moynihan credited this to the bank’s “commitment to responsible growth.”

Things to know about the earnings report

During the second quarter, Bank of America generated $7.3 billion in profit, which is an 8% increase from a year earlier. This amounts to 74 cents per share, which beats investor expectations of 71 cents per share.

And Bank of America’s revenue rose more than 2% from a year earlier to reach $23.2 billion. This was largely thanks to the growth of the bank’s retail lending operations. The bank added new loans and deposits, which helped its consumer banking division grow by 13%. 

And the bank managed to improve its operating leverage for the 18th straight quarter. This means the bank was able to grow its revenue without increasing its sales. 

In April, CFO Paul Donofrio warned investors that the bank’s net interest income would be half of what it was in 2018. During the conference call on Wednesday, Donofrio warned that this will likely be exacerbated if the Fed cuts interest rates this year.

And the bank’s net interest margin fell seven points from the first quarter to 2.44%. Investors were expecting Bank of America’s net interest margin to reach 2.47%. 

Conclusion

Overall, Bank of America demonstrated strong financial growth during the second quarter. Like many other banks, it will likely be affected by tighter market conditions going forward. 

Bank of America is just one of several banks warning investors about how falling interest rates could affect its profits in the coming year. However, Moynihan did say that the bank could reign in its expenses if need be.

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