Bank Of America Stock Pops On Another Clean Beat

Bank of America reported a strong first quarter Tuesday, laying a solid foundation for the rally that followed. Shares closed at $54.32, up about 1.8%, after trading as high as $55.37 intraday. Bank of America posted first-quarter revenue of $30.3 billion, net income of $8.6 billion, and diluted earnings per share of $1.11, with EPS above the $1.01 analysts had been expecting. And that was not the quarter’s only selling point — it also marked Bank of America’s 16th consecutive period of year-over-year sales and trading growth.

The underlying business gave the rally plenty to work with beyond the usual earnings beat. Net interest income rose to $15.7 billion from $14.4 billion a year earlier, an important signal because it pointed to improvement in the core business rather than a one-off boost elsewhere. Consumer Banking revenue climbed to $11.0 billion from $10.5 billion, and that segment alone produced $3.06 billion of net income. That strength also showed up in funding, with average deposit balances rising to $2.02 trillion for Bank of America’s 11th straight period of sequential growth. That was only part of the support behind the move, with capital-markets scoring the business even more points on Wall Street.

Sales and trading revenue rose to $6.39 billion from $5.67 billion, the bank’s highest level in more than a decade, with equities jumping to $2.84 billion from $2.19 billion for record equities trading revenue. Investment-banking fees also rose to $1.84 billion from $1.52 billion, helped by better advisory and underwriting activity. That gave investors clear evidence that more than one part of the business was contributing to the rally, with support coming from core lending economics, a firmer capital-markets backdrop, and a trading desk that management said did not post a single daily loss during the period. The unusually clean trading backdrop management described only added to that strength.

Just as important, the quarter did not come with any nasty credit surprises that could have overshadowed the rest of the report. Provision for credit losses was $1.34 billion versus $1.48 billion a year earlier, and the total net charge-off ratio was 0.48% versus 0.54%. Average deposits across the company were just over $2.0 trillion, while average loans and leases topped $1.17 trillion. Bank of America also returned $9.3 billion to shareholders through dividends and buybacks. That helped close out a quarter in which strength showed up across essentially every major business line at once.

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