Bank of America (BAC.US) reported better-than-expected Q2 results and expects net interest income to increase before the end of the year.
1min read Second-quarter net interest income (NII) of BAC.US fell, but revenue and profit beat expectations on the back of growth in investment banking and management fees, and the company said NII, a key metric, would rebound before year-end.
Data showed that as one of its largest sources of income, NII fell to $13.7bn in the three months ended June, below the $13.8bn expected by analysts. Provision for credit losses was $1.5bn, up from $1.1bn a year earlier.
NII’s decline led to a 6.9 per cent year-on-year decline in profit to $6.9bn, or $0.83 per share, but above the $0.80 expected. Revenue rose 1 per cent to $25.4bn, above the $25.2bn expected.
Breaking down the results, investment banking fees rose 29 per cent to $1.56bn, slightly above the $1.51bn expected. Asset management fees rose 14 per cent to $3.37bn, helped by a 6.3 per cent rise in revenue to $55.7bn, in line with expectations.
Equity, fixed income, foreign exchange and commodities trading revenues fell short of expectations, down 1 per cent.
The bank said earlier this year that NII could be a “low point” for 2024, and in its Tuesday earnings call, the company said NII could climb to about $14.5bn in the fourth quarter, above the $14.4bn expected by analysts on a fully taxable equivalent (FTE) basis.
The bank’s performance gives another glimpse of how consumers and businesses are faring as the Federal Reserve keeps borrowing costs high for longer than analysts had expected. Banks’ balance sheets remain resilient as interest rates rise, geopolitical tensions mount and the November US election approaches.
“Our leading consumer banking franchise and profitability, along with our global market, global banking and wealth management businesses, are growing and profitable,” said Brian Moynihan, chief executive, in a statement.
Results last week from JPMorgan and Wells Fargo showed NII below expectations, with executives citing higher-than-expected costs. The results show that the growth engine, which has powered profits higher in recent years as banks have dealt with a slump in loan demand and faced pressure from customers to raise deposit rates, is now under pressure as they respond to the slump.
The bank’s shares rose about 2 per cent before the market opened on Tuesday, and are up 24 per cent so far this year.