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Bank of America Tops Earnings Forecasts, Plans $25 Billion Buyback

Bank of America follows its larger rival, JPMorgan, in using loan loss reserve releases to boost its first-quarter earnings.

Bank of America  (BAC) - Get Bank of America Corp Report posted stronger-than-expected first-quarter earnings Thursday that included the release of $2.7 billion in reserves set aside to cover bad loans during the peak of last year's pandemic and plans for a $25 billion share buyback.

Bank of America said profit for the three months ended in March were tabbed at 86 cents per share, up 132% from the same period last year and firmly ahead of the Street consensus forecast of 66 cents per share. Bank of America also released $2.7 billion in loan loss reserves which boosted its bottom line by around 73 cents per share.

Group revenue, Bank of America said, fell 0.4% to $22.82 billion but again topped analysts' estimates of a $22.13 billion tally while net interest income fell 16% to $10.2 billion.

"Our team produced exceptional results this quarter: record or near-record levels of deposits, investment flows, investment banking revenue, digital users and client engagement. Meanwhile, brand loyalty, customer satisfaction and employee engagement reached new highs," said CEO Brian Moynihan. "While low interest rates continued to challenge revenue, credit costs improved and we believe that progress in the health crisis and the economy point to an accelerating recovery. 

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"The strength of our balance sheet, our complementary and diverse set of businesses, and our talented teammates position us to perform well in that environment," he added. 

Bank of America shares were marked 2.6% lower in early trading following the earnings release to change hands at $38.82 each, a move that clips the stock's year-to-date gain to around 28%.

JPMorgan  (JPM) - Get JPMorgan Chase & Co. Report used a $5.2 billion loan loss reserve release to boost its bottom line by around $1.19 per share, to $4.50 in yesterday's first quarter update, while Wall Street rival Goldman Sachs Group  (GS) - Get Goldman Sachs Group, Inc. Report rode the strongest gains in global markets revenue in more than a decade to post Street-beating earnings of $18.60 per share

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