Bank of America earnings top expectations

BofA beats Street on top and bottom line
BofA beats Street on top and bottom line

Bank of America reported quarterly earnings and revenue that beat analysts' expectations on Monday.

The commercial banking giant posted second-quarter earnings per share of 36 cents, compared to 45 cents a share in the same period a year ago. Analysts had expected the company to report earnings of about 33 cents a share on $20.414 billion in revenue, according to a consensus estimate from Thomson Reuters.

Revenue for the quarter came in at $20.6 billion, against the comparable year-ago figure of $22.345 billion. Bank of America shares rose more than 1 percent when markets opened for trading Monday morning.

The results make Bank of America the third big U.S. financial institution that has topped second-quarter profit forecasts, following Citigroup and JPMorgan Chase last week.

Goldman Sachs is expected to report earnings Tuesday, with Morgan Stanley earnings expected Wednesday.

Brian Moynihan
Jason Alden | Bloomberg | Getty Images

"Our responsible growth strategy led to improved customer and client activity and each of our four business segments reported higher earnings than the year-ago quarter," Bank of America CEO Brian Moynihan said in a statement. "We also moved closer to our longer-term performance targets."

Like virtually all U.S. banks, Bank of America has struggled in 2016, first under the weight of plunging loan values in the energy sector as oil prices struggled, and later as the markets began to expect interest rates to stay lower for longer. Bank of America stock is down nearly 20 percent so far this year.

Staffing at the bank is down more than 2.8 percent year-over-year, to more than 210,000 employees, and headcount is also down from the first quarter of the year. While the bank has closed more than 100 financial centers in the last 12 months, that pace appears to have slowed. The bank has only eight fewer financial centers at the end of the second quarter compared to the first quarter, at 4,681, which reflects a slowing in the pace of closure of branches.

Moynihan said during the second quarter that prolonged low interest rates could spur job cuts, and he appeared to acknowledge the lower-for-longer environment on the bank's conference call.

"We believe we surely can [maintain profitability without an interest rate hike]," Moynihan said. "If rates rise, we would expect [net interest income] to grow."

After a turbulent first quarter that hampered many big Wall Street banks, Bank of America also reported better overall sales and trading figures than it did to begin 2016. Additionally, the bank's fixed income, currencies and commodities (FICC) trading division outperformed its first quarter tally. Bank of America CFO Paul Donofrio said on the firm's earnings call that the increase in FICC revenue translated to a 22 percent year-over-year increase.

There were other bright spots for the bank in its earnings report; Bank of America's delinquencies and charge-offs for its U.S. credit card business fell compared to the first quarter, according to its earnings report. Purchasing volumes for its U.S. credit card business rose, however.