BofA profit beats expectation on robust investment banking, trading
Adds CEO's quote in paragraph 4-5, analyst quote 6-7
By Niket Nishant and Saeed Azhar
July 16 (Reuters) - Bank of America's BAC.N second-quarter profit dropped as higher deposit costs pushed its interest income lower, but the results beat analysts' estimates, boosted by investment banking and trading.
Shares climbed more than 4%after BofA also forecast better-than-expected net interest income (NII) - the difference between what banks earn on loans and pay out on deposits - for the fourth quarter.
CEO Brian Moynihan cited growth in new consumer checking accounts for the 22nd consecutive quarter in a conference call with analysts. He began the call by wishing former U.S. president Donald Trump speedy recovery afteran assassination attempt on Saturday.
The bank's new interest income target factors in three potential interest rate cuts by the Federal Reserve of 25 basis points in September, November and December, according to a bank presentation.
David Wagner, a portfolio manager at Aptus Capital Advisors, said Bank of America was able to grow in some areas despite a difficult environment for interest income.
"One thing that stood out to me was that BAC's guidance assumes three cuts, while the market is only pricing in two cuts," he said.
INVESTMENT BANKING
Investment banks have brought in more underwriting fees as capital markets resurged. A resilient U.S. economy has encouraged companies to raise capital by selling stocks and issuing bonds in recent months.
Mergers and acquisitions are also gaining momentum, boosting advisory fees for investment banks. BofA's investment banking fees jumped 29% to $1.6 billion in the second quarter, echoing results at peers.
Underwriting income in the second quarter this year jumped 32%, while fees from syndication surged 77%.
Sales and trading revenue jumped 7% to $4.7 billion, growing for the ninth consecutive quarter year-on-year, as equities jumped.
"The interest rate environment has settled down a little bit, and obviously there's a significant amount of geopolitical and election uncertainty around the world, but that tends to be an environment where clients reposition," CFO Alastair Borthwick told journalists on a conference call.
"That tends to be a reasonably good environment for our sales and trading business."
The second biggest U.S. lender earned $6.9 billion, or 83 cents per share, in the quarter ended June 30, 7% lower than a year earlier, but above expectations of 80 cents per share, according to LSEG.
Its wealth and investment management unit also fetched 6% higher revenue and saw 10% growth in client balances to a record of more than $4 trillion.
STRONG FORECAST
The cost of preventing a deposit outflow has eroded banks' gains from the rising interest they are charging borrowers.
Banks are shelling out more on deposits as interest rates are at their highest since 2007, which have boosted returns on bonds, making alternatives such as money market funds more attractive.
BofA's NII fell 3% to $13.7 billion in the second quarter. Provisions for credit losses rose to $1.5 billion from $1.1 billion a year earlier.
But executives predicted a recovery in the second half. They forecast net interest income would rise to$14.5 billion in the fourth quarter, above LSEG estimates of $14.4 billion, as the bank reprices mortgage and auto loans.
The forecast for increased NII solidifiesearlier comments signaling that interest income would reach a trough in the fourth quarter, said Stephen Biggar, banking analyst at Argus Research.
BofA shares have climbed almost 30% this year, outperforming rivals JPMorgan and Wells Fargo WFC.N.
Reporting by Niket Nishant in Bengaluru and Saeed Azhar in New York; additional reporting by Michelle Price in Washington; editing by Lananh Nguyen, Shinjini Ganguli and Nick Zieminski
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.