Earnings Reports

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Bank of America reported better than expected third quarter earnings before the bell Wednesday. 3 of 4 $BAC main divisions gained in revenue, up 8% global banking business to $5.2 billion on higher investment banking fees. JPMorgan Chase $JPM. Wells Fargo $WFC, PNC Financial $PNC Goldman Sachs and  Citigroup have all reported also.

Bank of America Mortgage

Bank of America Corporation NYSE: BAC Reported Earnings Before Open Wednesday

$0.56 Beat $0.51 EPS Forecast and $23.00 billion Beat $22.79 Billion Forecast in Revenue

Earnings

Bank of America third quarter income rose 4% to $7.5 billion, or an adjusted 75 cents a share, excluding an impairment charge from the end of the First Data partnership. Unadjusted with the $2.1 billion charge, net income fell to 56 cents a share, exceeding the 51 cent estimate of analysts surveyed by Refinitiv.

Total revenue was almost unchanged from a year earlier at $23 billion, ahead of the $22.79 billion estimate.

Bank of America Corporation NYSE: BAC

Market Reaction: Pre-market $30.39 +0.66 (2.22%)

Highlights

Three of the bank’s four main divisions reported gains in revenue,

  • Global banking business posted an 8% increase to $5.2 billion on higher investment banking fees. Citing a boost from hiring more bankers in a push for middle-market deals
  • BAC posted a 27% increase in advisory fees to $1.5 billion, exceeding the $1.27 billion estimate.
  • The performance was the biggest gain in investment banking revenue reported so far of any major Wall Street firm.
  • Consumer banking revenue rose 3% to $9.7 billion on increased interest income as the bank grew loans by 7% and deposits by 3%.
  • Wealth management revenue climbed 2% to $4.9 billion on higher interest and asset management fees.
  • The trading division revenue excluding accounting charges fell 2% to $3.88 billion which matched expectations, producing $2.1 billion in fixed income revenue and $1.1 billion in equities trading revenue.
  • Total company revenue was almost unchanged from a year earlier at $23 billion, edging out the $22.79 billion estimate.

“In a moderately growing economy, we focused on driving those things that are controllable,” CEO Brian Moynihan said in the earnings release. “We made continued strong investments in our capabilities to serve customers, more relationship management teammates, more and refurbished branches and offices, and more digital capabilities, all while core expenses are flat.”

Outlook

On a conference call Wednesday, management reiterated guidance that growth in net interest income in 2019 would be about 1% after the Fed cut rates twice in the quarter.

CFO Paul Donofrio declined to give analysts an estimate on NII for 2020, saying it was dependent on what the Fed does. Under Moynihan, Bank of America has steadily trimmed expenses while holding the line on or increasing revenue. The bank has said that its expenses would total $53 billion for 2019.

 

 Source: BAC, AlphaStreet

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