Bank of America beats expectations as higher interest rates boost offsets trading slowdown

 
William Turvill
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Bank of America reported a net income of $5.3bn, up 10 per cent (Source: Getty)

Bank of America beat expectations with its second quarter as the lender benefited from higher US interest rates.

The figures

The bank today reported revenue rises in three of its main divisions – consumer banking, wealth management and global banking – which more than offset a trading slowdown.

Global banking, the lender’s biggest business, reported a record turnover of $5bn (£3.8bn) for the period, with investment banking fees up nine per cent to $1.5bn.

In Bank of America’s global markets business, sales and trading revenue excluding debit valuation adjustment was down nine per cent year-on-year.

Overall, the bank reported a net income of $5.3bn, up 10 per cent. Earnings per share (EPS) were up 12 per cent to $0.46, above expectations of $0.43. Total revenues came in at $22.83bn, ahead of $21.78bn expected by analysts, according to a Reuters consensus.

Read more: US bank shares fall despite trio beating expectations

Why it’s interesting

Bank of America joined Goldman Sachs, which also reported its second quarter results, and other big US banks in reporting a slowdown in trading due to low volatility.

But the lender is considered the most sensitive to US interest rates and benefited from the Federal Reserve tightening policy twice this year.

What the company said

Chief executive Brian Moynihan said:

Against modest economic growth of two per cent, we had one of the strongest quarters in our history. All of our businesses delivered strong results, with several setting new records. The investments we made to transform how we serve clients produced 500 basis points of operating leverage in the quarter. We achieved our 60 per cent efficiency ratio target, and we continued to manage credit risk carefully in line with responsible growth. This supports our plan to return $17bn in capital during the next four quarters, including a 60 percent increase in the quarterly common dividend.

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