Bank of America reports profit beat, revenue miss

Bank of America trims net interest income guidance

Bank of America trims net interest income guidance

It posted revenue of $23.2 billion, a 2.1% increase from a year earlier, matching analysts' estimates.

Bank of America Corp lowered its annual net interest income guidance on Wednesday to reflect a weakened interest rate environment as the second-largest US lender reported higher-than expected earnings fueled by strong consumer trends.

According to the bank's CEO (see commentary below), the better value is partly due to the fact that Bank of America took 7% of its shares off the market in the last 12 months through share buybacks (fewer shares = higher earnings per share).

Turnover amounted to 23.1 billion dollars (previous year's quarter 22.6/expected 23).

USA consumers propelled Bank of America Corp.'s profit in the latest quarter, though the bank warned it could take a hit from any Federal Reserve rate cuts. Some companies were affected by the continuing trade battles between the US and its trading partners, he said.

Expenses during the quarter were up slightly as the bank invested more in its consumer, commercial and wealth management businesses. Fixed income trading revenue dropped 8% to $2.13 billion, essentially matching estimates, while equities trading fell 13% to $1.15 billion, just below the $1.22 billion estimate.

Gains in the retail division helped drive overall profit to a record in the second quarter as loans and deposits grew, while mortgage activity surged and provisions for bad loans posted a surprise drop from the first quarter. Executives said lower long-term rates and any Fed rate cuts would cut into net interest income growth this year.

Its interest margin fell in the second quarter to 2.44% from 2.51% three months earlier, though it was still higher than a year earlier. Expenses were roughly flat.

Bank of America (NYSE:BAC) Q2 EPS of 74 cents beats the average analyst estimate of 71 cents and increases from 70 cents in Q1 and 63 cents in Q2 2018. Trading revenue fell about 10%.

Consumer banking has held up for the big Wall Street banks that have reported second-quarter results this week, cushioning a blow from weakness in trading and advisory businesses.