Bank of America profit beats estimates as traders get boost from market turmoil
Bank of America beat profit estimates for the latest three-month period on Wednesday as its traders brought in more revenue from tumultuous markets, while interest income rose for a fourth straight quarter.
Banks' trading desks benefited from market turbulence during the second quarter as clients reacted to shifting U.S. trade policies and escalating geopolitical tensions.
The bank's shares, which have gained five per cent this year, rose one per cent in trading before the bell.
Peers JPMorgan Chase and Citigroup also beat second-quarter profit estimates, helped by gains in their trading divisions.
BofA's sales and trading revenue jumped 15 per cent to US$5.4 billion in the quarter, the 13th consecutive quarter of year-over-year revenue growth.
In trading, equities revenue surged 10 per cent, while fixed income, currencies and commodities (FICC) revenue jumped 16 per cent in the quarter.
'Consumers remained resilient, with healthy spending and asset quality, and commercial borrower utilization rates rose. In addition, we saw good momentum in our markets businesses,' CEO Brian Moynihan said in a statement.
BofA's investment banking fees slid nine per cent to $1.4 billion in the second quarter, lagging behind rivals. Investment banking fees rose seven per cent at JPMorgan, 13 per cent at Citigroup and nine per cent at Wells Fargo, which benefited from rebounding activity at the end of the quarter.
Dealmaking was stalled in April by uncertainty over U.S. President Donald Trump's shifting trade policies, geopolitical tension and elevated interest rates. However, banking executives and analysts have expressed optimism about the M&A pipeline and foresee more transactions in the second half of the year.
Last month, BofA had projected investment banking fees to be roughly $1.2 billion, while trading revenue was expected to grow by mid- to high-single digits.
BofA's profit was $7.1 billion, or 89 cents per share, for the three months ended June 30, compared with $6.9 billion, or 83 cents per share, a year earlier.
Wall Street had expected BofA to earn 86 cents a share in the quarter, according to estimates compiled by LSEG.
Interest income
Rate cuts by the Federal Reserve last year have helped reduce the cost of deposits for banks, allowing them to pocket more in net interest income - the difference between what they earn on loans and pay out on deposits.
BofA's net interest income grew seven per cent to $14.7 billion. The bank had previously forecast record NII for 2025, and CEO Brian Moynihan reiterated that target last month.
Bank of America reiterated that its NII would reach $15.5 billion to $15.7 billion in the fourth quarter.
The lender set aside $1.6 billion in provisions for credit losses in the second quarter, compared with $1.5 billion a year earlier.
BofA's stock has underperformed its major peers and the broader KBW Bank Index .BKX so far in 2025.
(Reporting by Pritam Biswas and Arasu Kannagi Basil in Bengaluru and Nupur Anand in New York; editing by Lananh Nguyen and Anil D'Silva)
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