BofA profit jumps as equities trading revenue improves
Sales and trading revenue in the bank’s global markets division rose 17% to $4.19 billion
Bank of America Corp reported a stronger-than-expected 70% rise in second-quarter profit, helped by higher revenue from equities sales and trading and a drop in expenses.
Net income applicable to common shareholders rose to $3.57 billion, or 32 cents per share, from $2.10 billion, or 19 cents per share, a year earlier. Revenue, net of interest expense, rose 3.5% to $22.73 billion.
Analysts on average had expected the second-biggest US bank by assets to earn 25 cents per share, according to Thomson Reuters .
Bank of America shares were up 1% at $14.05 before the bell.
The bank’s operating expenses fell to $16.02 billion from $17.05 billion in the same quarter last year.
Cost-cutting has been a priority for chief executive Brian Moynihan, who took charge in 2010.
Bank of America unveiled an initiative in 2011 that aims to save $8 billion a year and has set a goal of achieving $1.5 billion in savings per quarter by the fourth quarter of 2013.
Sales and trading revenue in the bank’s global markets division rose 17% to $4.19 billion, excluding an accounting adjustment.
Revenue in the global banking division rose 6% to $4.14 billion, driven by a 24% rise in revenue from investment banking fees.
Revenue in the consumer and business banking division was little changed at $7.43 billion, while revenue from the global wealth and investment management business increased 10% to $4.50 billion on higher asset management fees.
Bank of America’s shares have risen nearly 20% this year through Wednesday, well below the 25% increase in the KBW index of bank stocks.
The bank’s net interest margin, a measure of the profitability of its loans, rose to 2.44% from 2.21% a year earlier.
Rising interest rates should alleviate pressure banks have faced on margins, but that trend will take time to bear fruit.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!