Bank of America posts better-than-expected results thanks to growth in investment banking

Key conclusions

Bank of America shares rose Tuesday after announcing that second-quarter revenue and profit were better than analysts had forecast.
However, net interest income was lower than during the same period last year as Bank of America joined other banks that recently reported a decline in net interest income in the second quarter.
The bank’s investment banking business proved to be a source of growth as consumer banking revenues fell 3% year-on-year.

Bank of America (BAC) shares rose Tuesday as second-quarter revenue and profit beat estimates, despite slightly lower net interest income (NII) than analysts had predicted.

The bank reported net income of $6.9 billion, or 83 cents a share. That was down from a year ago but still better than the $6.6 billion, or 79 cents a share, forecast by analysts, according to estimates compiled by Visible Alpha.

Revenue also beat estimates, rising about 1% year over year to $25.4 billion, which Bank of America attributed to higher fees as well as improved sales and trading revenue. However, NII fell 3% to $13.7 billion, slightly below the $13.79 billion expected by analysts, as Bank of America continued a trend of lower NII that began last week in bank earnings as higher deposit costs offset the benefits from higher interest rates.

Wealth management, investment banking drive growth

Consumer banking revenue fell 3% to $10.2 billion, but wealth management revenue rose 6% to $5.6 billion and investment banking fees rose 29% to $1.6 billion.

Bank of America’s competitors – JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC) and Citigroup (C) – have also reported higher second-quarter revenue from their investment banking businesses in recent days.

Bank of America shares were up 3.6% at $43.41 as of 9:55 a.m. ET Tuesday. They have climbed more than 28% for 2024.