Following a solid quarter from JPMorgan, a report marred by hundreds of millions in losses on prop trading at Goldman and generally mixed results from the rest on Tuesday, Bank of America stepped up to bat.
Q3 EPS was $0.56 or $0.75 excluding an impairment charge. The adjusted figure looks like a beat. The street was looking for $0.68 (the range was 64c to 72c). Revenue net of interest expense came in at $22.81 billion, bang in-line, apparently.
In the second quarter, the bank posted net interest income that missed the lowest estimate. In Q3, NII was $12.34 billion – that looks like a beat too.
Firm-wide, charge-offs fell as did provisions. The latter rose slightly in the consumer and commercial portoflios, although the net charge-off ratio improved. Revenue on the consumer banking side was $9.7 billion, up 3%, from Q3 2018, driven by NII due to growth in deposits and loans. Noninterest expense rose 2% YoY.
Net interest yield was 2.41%, down 4bps from the third quarter of 2018 and 3bps from last quarter. The street was looking for 2.39% there, so that should work. Ex-global markets, net interest yield was 2.89%, down 6bps YoY.
Speaking of global markets, trading revenue ex-DVA was $3.22 billion, up 4% YoY. FICC is largely in line, with revenue ex-DVA of $2.07 billion. That’s down slightly YoY, and stacks up against estimates of $2.06 billion. The bank cites improvement in mortgages and municipal products. Equities trading revenue ex-DVA came in at $1.1 billion, up +13% YoY, and a beat versus estimates of $1.06 billion.
Investment banking revenue was $1.53 billion, up +27% on a jump in fees for debt and equity advisory fees and M&A. That seems like a good number.
There was an impairment charge of $2.1 billion this quarter, but the non-adjusted EPS number (the $0.56) looks to have beaten estimates too.
All in all, nothing sticks out as being particularly “wrong” with these numbers. The shares jumped sharply in the pre-market.
Brian Moynihan delivered a somewhat muted take on the US economy, calling it “moderately growing”. “Core expenses were flat”, despite investments aimed at serving the consumer brand. Here’s what else he had to offer to his “teammates”:
Our teammates delivered another strong quarter of earnings and returns for shareholders. In a moderately growing economy, we focused on driving those things that are controllable. We made continued strong investments in our capabilities to serve customers, more relationship management teammates, more and refurbished branches and offices, and more digital capabilities, all while core expenses are flat. Our client activity, the expansion of our client base, and our ability to gain market share across most of our businesses in the quarter, all reflect responsible growth.
Full resultsThe Presentation Materials
The Press Release