Bank of America (BAC) earnings Q1 2021

Bank of America reported a profit on Thursday that beat Wall Street’s estimates of booming investment banking and trading results and the release of credit risk reserves as fewer consumers were expected to default.

The bank posted earnings of $ 8.1 billion, or 86 cents per share, in the first quarter, beating the analysts polled by Refinitiv, which was forecast at 66 cents per share. The company had sales of $ 22.9 billion, beating the estimate of $ 22.1 billion.

“While low interest rates continued to challenge revenues, borrowing costs improved and we believe advances in the health crisis and economy point to an accelerating recovery,” CEO Brian Moynihan said in the press release.

The company’s shares fell 3.9%. Analysts such as Jefferies’ Ken Usdin drew attention to Bank of America’s increased spending in the quarter; He said the cost was $ 600 million higher than his estimate, excluding any unusual items. Other analysts pointed to weaker-than-expected credit growth as a cause for concern.

Like other banking competitors, Bank of America has taken a huge advantage of the improving US economic outlook in recent months: it released $ 2.7 billion in reserves for loan losses in the quarter. Last year the company provided $ 11.3 billion in loan losses when the industry believed a wave of defaults related to the coronavirus pandemic was coming.

Instead, government stimulus programs appear to have prevented most of the losses feared, and banks started releasing more reserves this quarter.

Like JPMorgan and Goldman, the bank saw a boom in its trading activities. Fixed income trading revenues increased 22% to $ 3.3 billion, beating analysts’ estimates by approximately $ 660 million. Stock sales rose 10% to $ 1.8 billion, roughly $ 170 million more than expected.

The company’s Wall Street bankers were busy too: the company saw investment banking fees rise 62% to $ 2.2 billion, nearly $ 400 million more than analysts anticipated, suggesting an increase in stock subscription fees was down 218% to $ 900 million.

Bank of America separately announced a $ 25 billion share buyback program.

On Wednesday, JPMorgan Chase and Wells Fargo each released results that exceeded analysts’ expectations for reserves disclosure, while Goldman Sachs outperformed estimates for strong advisory and trading results.

Bank of America stocks are up 32% this year, outperforming the KBW Bank Index’s 26% gain.

Here are the numbers:

  • Merits: 86 cents per share compared to 66 cents per share expected by analysts surveyed by Refinitiv.
  • Revenue: $ 22.9 billion versus $ 22.1 billion that is expected.

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