Bank of America beat analysts’ estimates for profit as it cut expenses more than expected and posted a 25% surge in earnings at its consumer banking division.
The bank said first quarter profit rose 6% to $7.3 billion, or 70 cents a share, according to a Tuesday release, exceeding analysts’ estimate of 66 cents a share. Revenue was roughly unchanged from a year earlier at $23 billion, essentially meeting analysts’ estimates.
Under CEO Brian Moynihan, the megabank delivered its second straight record quarterly profit while methodically working costs down. Expenses fell 4% to $13.2 billion, almost $500 million below analysts’ estimate. The bank’s record profits have come despite tough conditions for Wall Street trading desks.
“Economic growth and consumer activity in the U.S. continue to be solid, businesses of every size are borrowing and driving the economy, and asset quality is strong,” Moynihan said in the release. “It was a challenging capital markets environment but our team and platform are optimized to serve clients and generate stable revenues across a range of market conditions over time.”
The firm’s biggest division, its consumer lending business, posted a 25% increase in profit to $3.2 billion. It managed that feat by boosting revenue in the business 7% to $9.6 billion while reducing costs by almost $200 million.
Global banking profit rose 2% to $2 billion. Wealth management profit rose 14% to $1 billion.
Shares of the bank dipped 1% in premarket trading at 6:59 a.m.
Moynihan has focused on methodically trimming costs while looking for profit opportunities that fit his “responsible growth” mantra. More recently, he has announced that the company’s success will be shared with employees: The bank is raising its minimum wage to $20 an hour over the next two years, the highest rate among the megabanks.
To tighten its grip on retail banking customers, Bank of America is also planning to release a digital financial coach for its 66 million customers in the fall.
The bank’s shares have climbed more than 20% this year, outperforming most of its peers and the KBW Bank Index.
Here’s what Wall Street expected:
Earnings: 66 cents a share, a 5.7% increase from a year earlier, according to Refinitiv.
Revenue: $23.3 billion, almost unchanged from a year earlier.
Noninterest expense: $13.7 billion, according to FactSet
Trading Revenue: Fixed income $2.26 billion, Equities $1.21 billion