Bank of America Q2 Earnings Miss Expectations As Market Sell-Off Weighs

  • Bank of America’s second-quarter earnings came in lower than expected on Monday as the market sell-off took a toll.
  • BofA’s global banking arm saw its profit fall sharply as activity slowed due to the high uncertainty in markets.
  • JPMorgan and Morgan Stanley’s earnings both missed expectations last week, but Citigroup’s results impressed investors.

Bank of America’s second-quarter earnings narrowly missed expectations on Monday, with the slump in stock markets over the three-month period leading to a slowdown in activity in the lender’s investment banking arm.

Profit at the Wall Street lender came in at $6.2 billion in the second quarter, down sharply from $9.2 billion a year earlier, when markets were riding high on a wave of stimulus.

The fall in profit took BofA’s earnings per share down to $0.73. That was below the $0.75 expected by analysts who had been polled by Bloomberg, and down from $1.03 in the same quarter a year earlier.

The coronavirus pandemic initially battered lenders in 2020 but huge amounts of government and central bank stimulus quickly caused financial markets to rebound and banking activity to recover.

However, a sharp drop in financial markets in 2022 has led to a slowdown in activity in capital markets, with the number of initially public offerings — from which investment banks reap large fees — falling sharply.

The bank said the Federal Reserve’s interest rate increases had boosted revenues in the

consumer banking

arm. But Chief Financial Officer Alastair Borthwick noted that BofA was dealing with “changing and challenging markets.”

Here are the key figures:

  • Earnings per share of $0.73, vs. $0.75 estimated by analysts polled by Bloomberg.
  • Revenue of $22.79 billion vs. $22.86 billion estimated.
  • Net income of $6.2 billion, vs. $9.2 billion a year earlier.
  • Global banking net income of $1.51 billion, vs. $2.43 billion a year earlier.

Shares in BofA were last trading down 0.74% at $32.25 in Monday’s pre-market session.

Banks have kicked off second-quarter earnings season with mixed results. Citigroup impressed investors by beating expectations on Friday, although profit still fell sharply compared to a year earlier.

JPMorgan and Morgan Stanley both missed analysts’ forecasts last week, however, in a sign of the pressure the market sell-off is putting on investment banks.

On Monday, Goldman Sachs’ earnings per share came in well above expectations on the back of a strong quarter by the bank’s fixed income traders.

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