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- Bank of America's Q1 earnings blew past analysts' forecasts, with profit more than doubling.
- The bank's traders reaped rewards from volatile markets in the first quarter.
- BofA's results followed stellar earnings from Goldman Sachs and JPMorgan.
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Bank of America's first-quarter earnings smashed analysts' estimates on Thursday, with profits more than doubling year on year to $8.1 billion as the bank released reserves set aside to cover coronavirus loan losses.
BofA's $8.1 billion of net income was far higher than analysts' forecasts of $6.25 billion and was up from $4 billion a year earlier, when the pandemic weighed on banks. It pushed earnings per share to $0.86, well above the consensus estimate of $0.66.
The rapidly recovering US economy helped the bank release $2.7 billion from the reserves it had built up as a buffer against potential loan losses, boosting profit.
And like its peers Goldman Sachs and JPMorgan, Bank of America benefited from a boom in trading revenue during a period of stock market volatility. Revenue from sales and trading jumped 17% to $5.1 billion, the bank said.
Bank of America shares were up 1.18% in pre-market trading to $40.35 after the first-quarter earnings were released.
Here are the key numbers:
- Net income: $8.1 billion, versus Bloomberg consensus estimate of $6.25 billion
- Earnings per share: $0.86, versus consensus estimate of $0.66
- Revenue: $22.8 billion, versus consensus estimate of $21.97 billion
"Our team produced exceptional results this quarter," Bank of America chairman and chief executive Brian Moynihan said in a statement. He said the bank had achieved "record or near-record levels of deposits, investment flows, investment banking revenue, digital users and client engagement."
However, Moynihan said that ultra-low interest rates continued to pose a challenge to revenue, with increased just 0.2% year on year to $22.8 billion. Net interest income fell 16% to $10.2 billion.
Both Goldman and JPMorgan also smashed Wall Street estimates on Wednesday, with the banking giants benefiting from a recovering economy, government stimulus and frothy markets. Wells Fargo similarly beat predictions as a turnaround effort showed early results.
"The US earnings season kicked off... with the largest US banks proving once again they can top analysts' expectations by wide margins," said Hussein Sayed, chief market strategist at trading platform FXTM.
"Growth in investment banking, capital markets and paring back loan loss reserves were major factors contributing to the bottom lines."
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