Bank of America on Tuesday, April 16, released earnings data for the first quarter of the current year.
The mentioned financial institution’s results for the first three months of 2024 exceeded preliminary expectations. Analysts’ forecasts regarding the bank’s profit and revenue turned out to be more pessimistic compared to the actual performance of the lender.
The unexpected result of the financial institution for the first quarter is largely due to high interest income and the upward dynamic of investment banking.
The lender’s profit for the first three months of 2024 amounted to $6.67 billion. This figure is 18% lower than the result recorded in the same period last year. Earnings per share were 83 cents. It is worth noting that LSEG analysts predicted that this indicator would be fixed at 76 cents.
The revenue of the financial institution for the first quarter amounted to $25.98 billion. This indicator showed a decrease of 1.6% year-on-year. The revenue figure recorded for the first quarter was largely due to a drop in net interest income. It is worth noting that this figure does not take into account the FDIC’s assessment of $700 million. Experts expected that the revenue of the financial institution for the first quarter would amount to $ 25.46 billion.
Bank of America’s net interest income for the first three months of 2024 amounted to $14.19 billion. This indicator is the difference between what a financial institution earns from loans and investments and what it pays customers for their deposits. Analysts at StreetAccount predicted that the financial institution’s net interest income for the first quarter would be $13.93 billion.
Wells Fargo analyst Mike Mayo said in a research note that Bank of America’s interest income was a slight positive surprise, although there is currently no confidence in the further positive dynamic of this indicator.
The total volume of deposits of a financial institution in the first quarter increased by about 1% compared to the figure for the last three months of 2023. This figure currently stands at $1.95 trillion. The volume of loans from a financial institution has remained virtually unchanged, continuing to remain at $1.05 trillion.
David Wagner, portfolio manager at Aptus Capital Advisors, said he was not impressed that the bank’s deposits and loans had not changed. According to him, the only sectors in which a financial institution did well are in which other lenders have demonstrated strength.
Bank of America CFO Alastair Borthwick told analysts on a conference call Tuesday that net interest income is likely to decrease in the second quarter, noting the expected impact of factors such as drops in wealth management and markets interest income. In his opinion, this indicator can demonstrate growth in the second half of 2024. In recent quarters, net interest income has been on a downward trajectory due to rising financing costs and higher interest rates.
After the earnings data was published, the value of Bank of America shares fell by more than 4%.
The financial institution’s revenue from investment activities in the first quarter increased by 35% year-on-year, amounting to $1.57 billion. The lender’s competitors, including Goldman Sachs and JPMorgan Chase, also have improved results in this area. Alastair Borthwick told analysts last month that the bank’s revenue from investment activities would grow by 10-15% in the first quarter.
The revenue of the financial institution from operations with equities in the first three months of 2024 increased by 15% year-on-year, amounting to $1.87 billion. The bank’s revenue from fixed-income operations demonstrated a negative dynamic. In the first quarter, this figure fell by 3.6% to $3.31 billion.
As we have reported earlier, JPMorgan Profit Exceeds Estimates.
