Brian Moynihan, Chairman and CEO of Bank of America Corp, speaks in New York, September 25, 2019.
Shannon Stapleton | Reuters
Bank of America on Monday reported first-quarter profit above analysts’ estimates, helped by better-than-expected credit quality among its borrowers.
Here are the numbers:
- Earnings: 80 cents per share vs. 75 cents per share Refinitiv estimate.
- Revenue: $23.33 billion vs. $23.2 billion estimated
The bank said profit fell 12% to $7.07 billion, or 80 cents per share, beating analysts’ estimate of 75 cents polled by Refinitiv. Revenue rose 1.8% to $23.33 billion, roughly in line with expectations.
Bank of America said a strong credit streak at the second-largest US lender by assets continued into the first quarter. Net loan write-offs, an industry term for what happens when borrowers fall behind on their payments, fell 52% from a year earlier to $392 million. That was less than half of StreetAccount’s $848.7 million estimate.
The bank only booked a $30 million provision for credit losses, well below the $468 million expected by analysts, and released $362 million of reserves the bank had previously set aside for defaults. expected.
The release of loan loss reserves by Bank of America contrasts with rival JPMorgan Chase, which revealed last week that it had chosen to build up reserves of $902 million due to growing risks of a recession, this which would lead to a wave of defaults.
Bank of America, led by CEO Brian Moynihan, had benefited from tailwinds as rising interest rates and a rebound in loan growth promised to boost revenue. But bank stocks have been hammered this year amid fears that higher inflation could help trigger a recession, leading to an increase in defaults.
As long-term rates rose during the quarter, short-term rates rose further, and this flat, or in some cases inverted, yield curve raised concerns about an upcoming economic downturn.
Bank of America shares fell 15% this year before Monday, worse than the 11.6% drop in the KBW banking index.
Last week, JPMorgan said its profits fell as it posted losses related to Russian sanctions and set aside money for future loan losses. Goldman, Morgan Stanley and Citigroup each beat expectations with stronger-than-expected business results, and Wells Fargo missed revenue amid falling mortgage lending.
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