Monday, Bank of America revealed a mixed second-quarter, the good half coming from increasing interest rates and the bad from compliance-related expenses of about $425 million.
In any case, here are the figures:
- Earnings: 73 cents per share. Refinitiv’s estimate was that each share would be 75 cents.
- Revenue: $22.79 billion, compared to $22.67 billion
The lender’s shares fell 1.7% in premarket trading.
Brian Moynihan has led Bank of America since 2010, and he has enjoyed tailwinds from rising interest rates and an increase in loan growth. A high inflation rate could spark a recession, which in turn could lead to higher loan defaults, which hammered bank stocks this year.
The declines in financial assets are also showing up in bank results in the third quarter, with Wells Fargo writing off $576 million in equity holdings because of “market conditions.”
A $257 million writedown on bridge loans to leveraged buyout clients was reported by JPMorgan last week. The bank’s CFO said last month that it would likely write down its buyout loans by $150 million.
Through Friday, Bank of America shares had fallen 28%, worse than the decline of the KBW Bank Index by 16%.
Wells Fargo and JPMorgan Chase reported lower second-quarter profit as the banks set aside more funds for loan losses; Morgan Stanley disappointed after a slower-than-expected slowdown in investment banking. Citigroup was the only company that met expectations for revenue. The uptick in rates, combined with favorable trading results, allowed it to outperform expectations.
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