Bank of America Return on Equity Highest in Seven Years

Bank of America reported better than expected first quarter earnings before the bell Monday following money center banks JPMorgan Chase $JPM. Wells Fargo $WFC, PNC Financial $PNC and  $C.  $BAC’s  return on equity of 10.8% was it’s first double-digit ROE in seven years. 

Bank of America, America’s second-biggest bank by assets reported better than expected first quarter earnings before the bell Monday following money center banks JPMorgan Chase $JPM. Wells Fargo $WFC, PNC Financial $PNC and  $C.  $BAC’s  return on equity of 10.8% was it’s first double-digit ROE in seven years.

BAC Earnings Mix 4 16 18

Earnings

EPS soared 51% to 62 cents a share on adjusted revenue rising nearly 4% to $23.1 billion beating expectations of earnings per share of 59 cents, on revenue of $22.907 billion Net income rose 42% to $2.7 billion.

Reaction: Bank of America $BAC

PreMarket $29.92 +0.09 (+.30 %)

“This was a strong quarter. Revenue was up 4% year-over-year and expenses were down 1%, making this the 13th consecutive quarter of positive operating leverage. We also carefully managed credit costs. We also returned $6.1 billion in capital to our shareholders through dividends and common stock repurchases,” said CFO Paul M. Donofrio.

Revenue Breakdown

  • Consumer Banking  rose  9% jump in its revenues to $9 billion
  • Global Wealth and Investment Management saw 6% revenue growth with loans in this segment up 7% to $159 billion.
  • Core lending rose 5%
  • Deposits rose 3%
  • Credit card charge-offs lower.
  • Sales and trading revenue increased by 6% to $4.1 billion
  • Trading revenue rose 3%, with a 38% spike in equity trading revenue and a 13% drop in fixed-income trading revenue.
  • Return on equity was 10.8%, the first double-digit ROE in seven years.

 

Previous Quarter Earnings

  • Bank of America $BAC Earnings Beat Estimates With Strong Trading Result
  • Bank of America $BAC Earnings Beats on Trading Income Rise

The bank rally had been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

Source: BAC, AlphaStreet

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