Bank of America posts Q2 earnings
Leading US bank exceeds analyst expectations, but allocation of extra $4bn for bad loans hits stock price
Bank of America (BofA) generated earnings of $3.5bn (£2.8bn, €3bn) in the second quarter of 2020, or 37 cents a share. This surpassed analyst expectations of 27 cents a share. Revenue estimates of $22bn were closer to the mark, with the North Carolina-based firm posting $22.5bn in the three-month period.
Like JPMorgan Chase and Goldman Sachs, BofA witnessed a surge in trading revenue, but at a smaller scale than its rivals. Nonetheless, the bank’s trading dvision exceeded expectations by $500m, with bond trading revenue jumping 50 per cent to $3.2bn and equities trading rising 7 per cent to $1.2bn.
BofA is thought to be more sensitive to changes in interest rates than other major banks and, in the second-quarter, current ultra-low rates drained its interest income by around 11 per cent. The lender’s share price has fallen 31.74 per cent since the start of the year.
Although the practice has become standard across most American banks, the news that BofA had increased its reserves for potential credit losses by $4bn did little to buoy market sentiment. In mid-morning trading (UTC), the bank’s shares were down by 2.26 per cent at $24.05.
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