Consumers boost BofA, but trading drags on Goldman
Higher consumer spending and economic optimism drove Bank of America’s first-quarter earnings up 40%, continuing a strong showing for most U.S. banks at the start of the year.
The bank’s customers were active during the quarter, adding to their account balances, taking out more loans, opening new credit card accounts and spending more on them. They also continued to shift their banking from the local branch to mobile and online.
“The U.S. economy continues to show consumer and business optimism, and our results reflect that,” CEO Brian Moynihan said in a statement after earnings were released Tuesday. He noted consumer spending was up.
The bank’s net income rose to $4.9 billion, or 41 cents a share, beating estimates by 6 cents, earnings tracker Thomson Reuters I/B/E/S said. Revenue rose 7% to $22.2 billion, better than forecasts of $21.6 billion and up from $20.8 billion in last year’s first quarter.
Goldman Sachs confounded expectations of many investors by reporting a weak trading performance and missing Wall Street forecasts. As a result, shares of the investment banking giant fell Tuesday, weighing on the Dow Jones industrial average.
Trading revenue for clients from fixed income, currency and commodities, historically a Goldman strength, totaled $1.69 billion, essentially unchanged from the same period last year. Net revenue from equities totaled $1.67 billion, a 6% drop, reflecting lower revenues in commissions and fees, the bank reported.
Many investors expected trading revenue to rise following recent interest rate hikes by the Federal Reserve and predictions for more later this year.
Bank of America’s shares dipped 10 cents, or 0.44% to close at $22.71 Tuesday, and Goldman Sachs fell $10.67, or 4.7%, to $215.59. BofA’s stock, which had rallied more than 50% from Election Day through its March 2 intraday high this year, has pulled back but is still up 3.4% in 2017.