Bank of America earnings top estimates on strong investment banking, release of loan-loss reserves

Bank of America earnings top estimates on strong investment banking, release of loan-loss reserves

Brian Moynihan, CEO, Bank of America

Scott Mlyn | CNBC

Bank of America reported Thursday earnings that topped Wall Street estimates on booming investment banking and trading results, as well as the release of loan loss reserves as fewer consumers were expected to default on loans.

The bank posted first quarter profit of $8.1 billion, or 86 cents a share, exceeding the 66 cents a share expected by analysts surveyed by Refinitiv. The company produced $22.9 billion in revenue, edging out the $22.1 billion estimate.

Like other banking rivals, Bank of America saw a benefit from the improving U.S. economic outlook in recent months: The firm released $2.7 billion in reserves for loan losses.

Here are the numbers:

  • Earnings: 86 cents a share, vs. 66 cents a share expected by analysts polled by Refinitiv.
  • Revenue: $22.9 billion, vs. $22.1 billion expected.

Other key figures:

  • Record investment banking fees of $2.2 billion.
  • Record equity underwriting fees of $900 million.
  • FICC trading up 22% to $3.3 billion.
  • Equity trading up 10% to $1.8 billion.

The shares gained 1.3% in early trading.

Bank of America, the second-biggest U.S. lender by assets, set aside $11.3 billion for credit losses last year, when the industry believed that a wave of defaults tied to the coronavirus pandemic was coming. Instead, government stimulus programs appear to have prevented most of the feared losses, and banks have begun to release more of their reserves this quarter.

Like JPMorgan and Goldman, the bank also saw a boost from its trading operations.

On Wednesday, JPMorgan Chase and Wells Fargo each posted results that exceeded analysts’ expectations on reserve releases, while Goldman Sachs beat estimates on strong advisory and trading results.

Shares of Bank of America have climbed 32% this year, exceeding the 26% gain of the KBW Bank Index.

This story is developing. Please check back for updates.

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