Bank of America overcomes the momentum of bond trade and loan growth

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(Reuters) – Bank of America Corp exceeded analyst estimates for quarterly earnings on Wednesday, as a boost in bond trading and growth in its loan portfolio helped the second largest US lender reduce the impact of lower interest rates.

FILE PHOTO: A Bank of America building is seen in Los Angeles, California, USA. UU., May 6, 2019. REUTERS / Lucy Nicholson

Bond trading has been a bright spot for large US banks that reported fourth-quarter results this week, largely due to the easy comparisons of the previous year when financial markets were selling due to trade and growth concerns. global.

Bank of America reported a 25% increase in bond negotiation revenue, although that was much lower than the 86% increase in JPMorgan Chase and Co and a 49% jump in Citigroup Inc.

Loans grew 6% in Bank of America, significantly exceeding increases in Citigroup and JPMorgan. Bank deposits increased 5%.

“The solid activity of the clients in the increase of the loans and the capture of deposits helped us to compensate the compression of the differential”, said the financial director, Paul Donofrio, in a statement.

However, revenue in consumer banking, the bank’s largest business, fell 5% to $ 9.5 billion, largely due to the three interest rate cuts last year by the Federal Reserve.

The bank’s net interest margin, which measures a bank’s profitability to lend depositors’ funds, fell to 2.35% from 2.52% the previous year, and from 2.41% in the previous quarter.

Bank of America is the most vulnerable among large US banks. UU. A fluctuations in interest rates due to its large stock of deposits and mortgage securities sensitive to rates.

Net income applicable to common shareholders fell to $ 6.75 billion in the fourth quarter ended December 31, from $ 7.04 billion the previous year.

Excluding items, the bank reported a profit of 75 cents per share, exceeding the analyst estimate of 68 cents.

Revenue, net of interest expense, fell slightly to $ 22.35 billion.

Bharath Manjesh report in Bangalore; Edition by Anil D’Silva and Sriraj Kalluvila

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