By Rachel Louise Ensign
Bank of America Corp. said Monday that first-quarter profit rose, continuing the string of better-than-expected earnings from the nation's biggest banks.
Quarterly profit at the Charlotte, N.C.-based bank was $6.92 billion, compared with $5.34 billion a year ago. Per-share earnings were 62 cents; analysts had expected 59 cents per share.
First-quarter revenue for the bank run by Chairman and Chief Executive Brian Moynihan came in at $23.125 billion, up from $22.25 billion a year ago. Analysts had expected $23.06 billion.
Bank of America shares, up nearly 1% in 2018, were unchanged at $29.80 in premarket trading. After a huge run-up following the 2016 presidential election, bank stocks broadly have stalled so far in 2018.
This quarter is the first time investors have a chance to see exactly how much the recent tax bill is helping the bank's bottom line. The banking industry was one of the biggest beneficiaries of the lower corporate tax rate. While it led to big one-time charges last quarter, the lower rate is starting to lift bank earnings this quarter. Much of that is already in analysts' estimates for the bank's future profits, however.
Interest rates also are helping earnings. Rising rates are typically good for banks because they turn a profit on the difference between what they pay on deposits and the rate they collect on loans. In the quarter, the Federal Reserve raised its benchmark rate for a sixth time.
Banks have been able to pocket most of the benefits from the rate increases because customers aren't broadly demanding more interest. The rate Bank of America paid on U.S. interest-bearing deposits was 0.30%, compared with 0.27% in the prior quarter.
Another bright spot: After a number of quarters of disappointing trading revenue, wild price swings for markets in the first quarter meant Wall Street's trading desks reported one of their best three-month periods in years.
Bank of America reported that trading revenue, excluding an accounting adjustment, rose less than 1% to $4.053 billion from $4.029 billion in the first quarter of last year. JPMorgan Chase & Co. and Citigroup Inc., the other two big Wall Street banks that reported results Friday, also showed rising trading revenue.
Quarterly expenses fell about 1% to $13.897 billion from $14.093 billion a year ago. Chief executive Brian Moynihan has made cost cutting a key tenet of his business strategy.
Write to Rachel Louise Ensign at [email protected]