Big bank earnings continued to roll in on Tuesday, when Bank of America delivered a set of results that looked solid, generally speaking.
Both the top and bottom lines were beats. Revenue of $25.02 billion was slightly ahead of consensus and net income rose 19%. EPS of $0.88 didn’t exactly blow anyone’s hair back, but it was up 21% and comfortably better than the $0.84 analysts expected.
Net interest income slipped sequentially for a second straight quarter on higher deposit costs and lower balances, but still rose double-digits YoY. $14.3 billion met estimates.
The bank reiterated its full-year NII forecast for just above $57 billion. Last week, JPMorgan notched another NII record and lifted its full-year guidance.
Overall loan growth decelerated to 3% from 7% at BofA, but loans matched estimates at $1.05 trillion. The loan growth downshift was less pronounced in consumer banking, where deposits dropped 6.7% YoY, but remained above $1 trillion. Total deposits of $1.88 trillion topped estimates.
For what it’s worth, Brian Moynihan described the US economy as “healthy,” even as growth is slowing. The jobs market, he said, is “resilient.” Alastair Borthwick called the consumer “strong” and noted total loss rates are still below pre-pandemic levels.
The bank’s trading results were good. Again. Recall that BofA’s traders had one of their best quarters ever in Q1. Despite receding volatility, Q2 was an encore, at least in FICC, where revenue of $2.76 billion rose 18% and easily topped estimates. The bank cited “strong trading performance” in FX and emerging market rates and better results in credit and mortgage products, only partially offset by commodities weakness. Equities revenue fell 2%, but $1.62 billion still counted as a beat.
So far in 2023, BofA’s trading haul is up 5.4% driven by a 17% increase in YTD FICC revenue.
The bank’s provision for losses rose $602 million to $1.1 billion. The net reserve build doubled from Q1 to $256 million. Consumer charge-offs rose to $720 million, up 37% YoY, driven by card. But at 0.33%, the firm’s charge-off ratio was still below levels seen prior to COVID.
I don’t think there’s much use in parsing the numbers much further. BofA had a decent quarter. Moynihan called it one of the firm’s strongest ever, at least if you care about net income which, as it turns out, some shareholders do.
On a call with reporters, Borthwick said American consumers are in good shape and described the trend in charge-offs as a “normalization” not a deterioration. The bank had no loss days in Q2, he noted.
