Bank of America (NYSE: BAC) topped expectations by reporting better than expected earnings for the second quarter of its fiscal year. Wall Street expected Bank of America earnings per share to rise 11 percent to 70 cents. Revenue was seen rising 2 percent to $22.97 billion. Bank of America reported earnings per share of 74 cents, an increase of 17 percent, and $23.2 billion in revenue.
Bank of American reported that consumer banking revenue grew 5 percent year-over-year, rising to $9.7 billion. Wealth management revenue rose 3 percent to $158 million. Revenue from global banking fell 1 percent to $5 billion. Equities trading revenue fell 13 percent to $1.1 billion, while fixed income trading revenue fell 8 percent to $2.1 billion.
The bank also reported that its net interest margin, a measure of the difference between how much banks pay out in interest and what they can charge to borrowers, declined. Its net interest margin in the first quarter was 2.51 percent and Wall Street predicted it would fall to 2.47 percent in the second. However, the bank only managed a net interest margin of 2.44 percent.
In April, Bank of America predicted growth in the income it earned from lending would slow down. CFO Paul Donofrio now sees net interest income growing 2 percent in 2019, down from a prior view of 3 percent to 6 percent. That is if interest rates remain stable. If the Federal Reserve continues with its plans to cut rates twice this year, starting this month, that growth would be reduced to about 1 percent.
Bank of America shares are up about 18 percent so far this year.