Bank of America (NYSE:BAC) on Thursday posted second-quarter earnings that were bolstered by stronger-than-expected bond trading and investment banking revenue.
The bank said it generated earnings of $3.5 billion, or 37 cents a share, exceeding the 27 cents a share expected by analysts. However, revenue of $22.5 billion barely edged out analysts’ estimate of $22 billion.
Bank of America’s trading division helped offset the drag caused by the coronavirus pandemic, although the firm’s trading results were less eye-popping than rivals JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS). The lender increased reserves for credit losses by $4 billion, and lower interest rates sapped interest income by 11%.
Bond trading revenue climbed 50% to $3.2 billion, and equities trading revenue climbed 7% to $1.2 billion. Combined, the trading division exceeded estimates by $500 million. Investment banking fees rose 57% to a record $2.2 billion in the quarter, exceeding the $1.67 billion estimate.
In May, Chairman and CEO Brian Moynihan said he expected trading revenue to rise by “high single digits,” a figure that would pale next to how rivals performed. At JPMorgan, trading revenue surged 79% to a record $9.7 billion, and Goldman produced a 93% increase in trading revenue to $7.2 billion.
The Charlotte, North Carolina-based BAC is considered by analysts to be the most sensitive of large banks when it comes to changes in interest rates, so they will be keen to hear how the lender is navigating the low-interest rate environment.
Shares in BAC slid 84 cents, or 3.4%, to $23.76.
