Bank of America Corp (NYSE:BAC) released its second quarter earnings on July 18. It posted earnings per share of $0.46 beating expectation of $0.43. Revenue from the bank’s fixed income trading unit hit $2.25 billion in the quarter. This result beat projections but still represented a decline of 14% year over year. Its global banking unit posted a record revenue of $5 billion. The bank’s net interest income of $11 billion was slightly below analyst expectations.
Bank of America stock has increased 11% in 2017 and 62% year over year. The bank was one of the biggest beneficiaries of the so-called “Trump Trade”; the surge experienced in the U.S. stock market after the election of Donald Trump. The performance of the bank in coming quarters will be dependent upon whether the Trump administration will be able to pass and implement legislation for its pro-growth policies. The administration did not get off to a good start with its proposed healthcare reform package, which suffered what seemed to be a final defeat in late July as it was defeated in the senate.
Tax reform is next on the slate, and the initial proposal teased enormous cuts to corporate tax. The bank also stands to gain from the repeal of Dodd-Frank, which has passed through the house and has overwhelming support among the Republicans. Stock for Bank of America was priced at $24.66 as of the late noon hour on August 9 – down 1% as markets were down across the board in the U.S. in response to increasing geopolitical tensions with North Korea.
