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Bank of America (BAC) Q1 2024 earnings

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Bank of America (BAC) Q1 2024 earnings

Bank of America beats estimates on better-than-expected interest income, investment banking

bank of America on Tuesday announced first-quarter earnings results that topped analyst expectations for profit and revenue from better-than-expected interest income and investment banking.

This is what the company reported:

  • Earnings: 83 cents per share adjusted, versus 76 cents expected, according to LSEG
  • Revenue: $25.98 billion, versus expected $25.46 billion

The bank said profit fell 18% to $6.67 billion, or 76 cents per share; excluding a $700 million FDIC assessment, earnings were 83 cents per share. Revenue fell 1.6% to $25.98 billion as net interest income fell from a year earlier.

Net interest income, or the difference between what the company earns on loans and investments and what it pays customers for their deposits, was $14.19 billion, higher than the StreetAccount estimate of $13.93 billion.

The bank’s interest income was a “slight positive surprise,” although it’s unclear whether that means the metric will improve sooner than expected, Wells Fargo analyst Mike Mayo said in a research note on Tuesday.

The bank’s total deposits of $1.95 trillion rose about 1% from the fourth quarter, while loans were essentially unchanged at $1.05 trillion.

“I was not impressed with deposits and loans remaining flat,” David Wagner, portfolio manager at Aptus Capital Advisors, said in an email. “The only areas where BAC has done well is where other banks have shown strength.”

Bank of America CFO Alastair Borthwick told analysts in a conference call Tuesday that NII is likely to fall to about $14 billion in the second quarter due to declines in asset management and market interest income, and in the second half of the year could grow.

The NII has fallen in recent quarters as borrowing costs have risen along with the rise in interest rates.

The bank’s shares fell more than 4%.

Investment banking revenue rose 35% to $1.57 billion, beating estimates of $1.36 billion and following a similar increase at rivals including Goldman Sachs And JPMorgan Chase.

It is also significantly higher than expectations from Borthwick, who last month told analysts to expect investment banking revenues to rise 10% to 15% from a year earlier.

The bank’s trading activities also exceeded expectations. Fixed income revenues fell 3.6% to $3.31 billion, slightly better than the $3.24 billion estimate, and equities revenues rose 15% to $1.87 billion, compared to the $3.24 billion estimate. $1.84 billion.