Bank of America tops analysts’ expectations amid higher interest rates

Bank of America on Tuesday posted second-quarter profit and revenue that edged out expectations as the company reaped more interest income amid higher rates.

Here’s what Bank of America reported:

• Earnings: 88 cents a share vs. 84 cents a share Refinitiv estimate
• Revenue: $25.33 billion vs. expected $25.05 billion

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The bank said earnings rose 19% to $7.41 billion, or 88 cents a share, from $6.25 billion, or 73 cents a share, a year earlier. Revenue climbed 11% to $25.33 billion, fueled by a 14% jump in net interest income to $14.2 billion, essentially matching the expectation of analysts surveyed by FactSet.

“We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market,” CEO Brian Moynihan said in the release. “Continued organic client growth and client activity across our businesses complemented beneficial impacts of higher interest rates.”

Bank of America shares climbed more than 4%.

The company’s Wall Street operations helped it top revenue expectations in the quarter. Fixed income trading revenue jumped 18% to $2.8 billion, edging out the $2.77 billion estimate, and equities trading slipped 2% to $1.6 billion, topping the $1.48 billion estimate.

Bank of America was expected to be one of the top beneficiaries of rising interest rates this year, but it hasn’t played out that way. The company’s net interest income, one of the main drivers of a bank’s revenue, has been questioned lately as loan and deposit growth has slowed. Last week, rival JPMorgan Chase posted a far stronger jump in net interest income that helped fuel a 67% surge in quarterly profit.

Still, CFO Alistair Borthwick told analysts Tuesday that net interest income would be slightly above $57 billion for the year, reaffirming the bank’s previous guidance.

Heading into Tuesday, BofA shares had declined about 11% this year before Tuesday, compared with the approximately 20% decline of the KBW Bank Index.

This month, the Consumer Financial Protection Bureau said it fined the Charlotte, North Carolina-based bank for customer abuses including fake accounts and bogus fees. Analysts may ask Moynihan if the problems have been resolved.

On Friday, JPMorgan, Citigroup and Wells Fargo each posted earnings that topped analysts’ expectations amid higher interest rates. Morgan Stanley also reported earnings Tuesday. Goldman Sachs wraps up big bank earnings Wednesday.