Bank of America beats expectations as big deals boost investment banking revenues to record level

 
William Turvill
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Bank of America joined JP Morgan Chase and Citigroup in beating analyst expectations with its first-quarter results (Source: Getty)

Bank of America beat expectations with its first-quarter results today, as the US lender was boosted by a record mergers and acquisitions (M&A) performance.

The figures

The bank’s net income for the first three months of the year came in at $4.86bn (£3.82bn), up 40 per cent on the same period last year.

The US company’s revenue for the period was $22.2bn, up seven per cent and ahead of consensus estimates of $21.61bn, according to a Yahoo Finance poll of analysts.

Read more: Goldman Sachs profits jump 80 per cent... shares dip three per cent

Earnings per share increased 46 per cent to $0.41, which beat expectations of $0.35.

Bank of America’s share price rose one per cent at the open in the US to $22.98.

Why it’s interesting

Bank of America is the fifth large US bank to report results in the last week. JP Morgan Chase and Citigroup both beat analyst expectations with 17 per cent profit jumps last week, while Goldman Sachs reported a profit leap of 80 per cent today, but fell short of expectations. Wells Fargo, which is recovering from an accounts-opening scandal, reported flat profits.

The strong banking results have, in general, been attributed to the Donald “Trump bump” and higher interest rates.

Bank of America today reported record first-quarter investment banking fees of $1.6bn and its best-ever M&A fees. The bank said it had been involved in six out of 10 of the world’s largest completed.

Earlier this month, Thomson Reuters estimated that global investment banking fees had rocketed to a 10-year high in the first quarter. S&P forecast last week that investment banking revenue would grow by five per cent of 2017 as a whole.

Read more: Wall Street awaits results from three more big banks this week

What the company said

Chief executive Brian Moynihan:

We saw good client activity in our balanced portfolio of businesses: consumer spending was up, our wealth management business had strong asset management flows, investment banking fees rebounded nicely, and we continued to provide credit and capital to our corporate and institutional clients to help them drive the economy forward.

The US economy continues to show consumer and business optimism, and our results reflect that.