By Bill Davis

July 18, 2022

BAC, Bank of America

Bank of America shares were rising Monday after the bank posted mixed second-quarter results but said net interest income could increase by as much as $1 billion in the next quarter.

Bank of America (ticker: BAC) reported earnings of $6.2 billion, or 73 cents a share, missing Wall Street forecasts. Analysts surveyed by FactSet expected the bank to earn 75 cents a share in the second quarter. A year earlier, Bank of America earned a profit of $1.03.

Revenue increased 6% to $22.7 billion, in line with consensus estimates. Trading revenue in the second quarter, Bank of America said, rose 17% to $4.2 billion, including net debit valuation adjustment gains of $158 million.

Net interest income, or NII, jumped 22% to $12.4 billion thanks to higher interest rates and loan growth, the bank said. Noninterest income, however, declined 9%, reflecting weaker capital markets, it added.

“Solid client activity across our businesses, coupled with higher interest rates, drove strong net interest income growth and allowed us to perform well in a weakened capital markets environment,” said CEO Brian Moynihan in a press release.

The bank expects net interest income to increase by between $900 million and $1 billion during the third quarter from the second quarter, said Chief Financial Officer Alastair Borthwick in a call with investors on Monday. Management believes it could grow even faster in the fourth quarter on a sequential basis.

The way we think about those NII increases, given the expense discipline that we have, is we expect the majority of that to fall to the bottom line,” Borthwick added.

Source: Bank of America Misses Estimates but the Stock Rises on Upbeat Guidance – MarketWatch
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