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Bank of America Beats Earnings Forecast, But Net Interest Income Slides

Rising expenses and a slump in net interest income clouded stronger-than-expected second quarter earnings from Bank of America Wednesday.

Bank of America  (BAC) - Get Bank of America Corp Report posted stronger-than-expected second quarter earnings Wednesday, thanks in part to credit reserve releases that offset a decline in net interest income.

Bank of America said profit for the three months ended in June were tabbed at $1.03 per share, up 178% from the same period last year and firmly ahead of the Street consensus forecast of 77 cents per share. Bank of America also released $2.2 billion in loan loss reserves which boosted its bottom line, and added benefits from a tax change in the United Kingdom.

Group revenue, the bank said, fell 4% to $21.5 billion missing analysts' estimates of a $22 billion tally while net interest income fell 6% to $10.3 billion.

"We delivered solid earnings and returned more capital to shareholders during the quarter as we moved to a more open economy. Our team continued to do a great job serving clients, as shown by the increased levels of client activity across all of our businesses," said CEO Brian Moynihan. 

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"More than 85% of our buildings and offices are open, and we're welcoming our teammates back. This means more face-to-face meetings; helping to increase sales of Consumer products and drive strong household growth in Wealth Management, and increased prospect calling in Commercial Banking," he added. "Consumer spending has significantly surpassed pre-pandemic levels, deposit growth is strong, and loan levels have begun to grow."  

Bank of America shares were marked 1.35% lower in early trading immediately following the earnings release to change hands at $39.45 each, a move that would trim the stock's year-to-date gain to around 29.7%.

"All in, we see this as a perfectly solid set of results for the present, with the bank very well positioned to capitalize on an economic recovery that eventually manifests in higher interest rates," said Credit Suisse analyst Susan Roth Katzke. 

Earlier this week, JPMorgan Chase  (JPM) - Get JPMorgan Chase & Co. (JPM) Report posted a 37% increase in investment banking revenues that helped offset an 8% slump in net interest income.

JPMorgan said earnings for the three months ending in June were pegged at $3.78 per share, up 174% from the same period last year and well ahead of the Street consensus forecast of $3.18 per share.

Goldman Sachs Group  (GS) - Get Goldman Sachs Group, Inc. (GS) Report also used a 36% surge in investment banking revenues, alongside a topline gain in asset management, to post stronger-than-expected earnings of $15.02 per share Tuesday, nearly 140% higher than last year's tally and firmly ahead of the Street consensus forecast of $10.24 per share.