Bank of America reported better-than-expected second-quarter revenue and profit, thanks to rising investment banking and asset management fees. The company’s earnings were 83 cents per share, surpassing the estimated 80 cents per share. Additionally, the revenue stood at $25.54 billion, slightly higher than the estimated $25.22 billion.
Although the bank’s profit slipped 6.9% from the previous year, the decline can be attributed to a decrease in net interest income caused by higher interest rates. However, the firm experienced a 29% increase in investment banking fees, reaching $1.56 billion, beating the estimated $1.51 billion. Asset management fees also rose by 14% to $3.37 billion, supported by an increase in stock market values. As a result, the wealth management division achieved a 6.3% increase in revenue to $5.57 billion.
Despite net interest income slipping by 3% to $13.86 billion, Bank of America’s new guidance on the measure provided investors with confidence in a potential turnaround. NII, which represents the difference between what a bank earns on loans and what it pays depositors for their savings, is expected to rise to approximately $14.5 billion in the fourth quarter of this year, according to the bank’s slide presentation. This aligns with previous statements made by executives, indicating that net interest income would likely hit its lowest point in the second quarter.
Investors have shown great interest in NII figures, as evidenced by Wells Fargo’s shares falling when it posted disappointing results in this metric. Bank of America’s announcement of a potential increase in NII guided their shares to rise by 2% in premarket trading.
This positive trend in banking earnings continued with JPMorgan Chase, Wells Fargo, Citigroup, and Goldman Sachs all surpassing revenue and profit expectations. The recent rebound in Wall Street activity has contributed to these favorable results across the industry.
In summary, Bank of America’s second-quarter performance exceeded expectations due to growth in investment banking and asset management fees. Although the profit declined slightly, the bank’s guidance on net interest income has provided investors with confidence in a potential recovery. This aligns with the overall trend of strong earnings in the banking sector, driven by improved Wall Street activity.
