BofA’s quarterly profit up 44% on surge in trading revenues

bengaluru — Bank of America reported a 44 per cent rise in quarterly profit as higher interest rates bulked up earnings from loans and an increase in trading boosted revenue.

The second-largest US bank said net income attributable to shareholders rose to $4.35 billion in the three months ended March 31 from $3.02 billion a year earlier.

Earnings per share rose to 41 cents per share from 28 per share. Analysts on average had expected earnings of 35 cents per share. It was not immediately clear if the reported figures were comparable. Total revenue, net of interest expense, rose seven per cent to $22.25 billion.

“We saw good client activity in our balanced portfolio of businesses ... The US economy continues to show consumer and business optimism, and our results reflect that,” chief executive Brian Moynihan said in a statement.

The Charlotte, North Carolinabased bank’s shares were up about 1 per cent at $23.05 in premarket trading. Big US banks have been vitalized by increased market activity prompted by the so-called “Trump trade”. They have also benefited from higher interest rates, which the US Federal Reserve has indicated will be raised again this year.

Interest rates were hiked in December and March - a 0.25 per centage point uptick in each case - marking only the second and third raise in seven years, after being kept stagnantly near zero. Bank of America relies heavily on higher interest rates to maximize profits as it has a large stock of deposits and rate-sensitive mortgage securities. Higher interest rates increased the amount of money banks can earn from their various loans, known as net interest income. BofA made $11.06 billion as net interest income in the quarter, up 5.5 per cent from a year earlier.

JPMorgan Chase and Citigroup last week also reported betterthan-expected quarterly profit, driven by increased trading activity. Excluding special items, the bank’s trading activities brought in $4 billion, a 21.2 per cent rise.

Revenue from fixed-income trading surged about 29 per cent, while equity trading revenue rose about 7 per cent, boosted by volatility around the Fed’s interest rate hikes. Bank of America posted record investment banking fees of $1.6 billion.

The lender’s non-interest expenses was nearly flat at $14.85 million. Moynihan said last year he would make trimming costs a top priority and would shrink annual expenses by about an additional $5 billion by 2018. Up to Monday’s close, the bank’s stock had risen about 34 per cent since President Trump’s election on November 8. — Reuters

— AFP A man using an ATM at a Bank of America branch in Washington, DC. Wall Street stocks advanced early on Monday ahead of a heavy week of corporate earnings including major companies such as Bank of America, Netflix, General Electric and others.