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Bank of America Q1 Earnings Top on Robust Equity Trading, Higher NII
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Bank of America’s (BAC - Free Report) first-quarter 2025 earnings of 90 cents per share surpassed the Zacks Consensus Estimate of 81 cents. The bottom line compared favorably with adjusted earnings of 83 cents in the prior-year quarter.
BAC shares are up more than 3.5% in early trading in response to better-than-expected quarterly performance.
Behind BAC’s Headline Numbers
Bank of America recorded an improvement in trading numbers for the 12th straight quarter. Sales and trading revenues (excluding net DVA) grew 9% to $5.65 billion, representing the highest number in a decade. Fixed-income trading fees increased 4.7%, while equity trading income jumped 16.7%. We had projected sales and trading revenues (excluding net DVA) of $4.85 billion.
This, along with higher net interest income (NII), was the major revenue growth driver for Bank of America. NII grew on a year-over-year basis, driven by relatively lower deposit costs and fixed-rate asset repricing. Management projects NII to grow sequentially to almost $15.5-$15.7 billion by the fourth quarter end.
On the other hand, total investment banking (IB) performance was subdued. The IB fees (in the Global Banking division) of $847 million were relatively stable as the plunge in equity underwriting income was almost offset by the improvement in advisory revenues and higher debt underwriting income.
Further, provisions and non-interest expenses increased during the quarter.
The company’s net income applicable to common shareholders grew 13.8% from the prior-year quarter to $7 billion. Our estimate for the same was $6.19 billion. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
BAC’s Revenues Improve, Expenses Rise
Net revenues were $27.37 billion, which beat the Zacks Consensus Estimate of $26.86 billion. The top line also increased 6% from the prior-year quarter.
NII (fully taxable-equivalent basis) grew 2.8% to $14.59 billion. Our estimate for NII was $14.55 billion. Net interest yield remained stable at 1.99%. We expected the metric to be 1.97%.
Non-interest income increased 9.6% to $12.92 billion. This was driven by higher total fees and commissions. We had projected a non-interest income of $12 billion.
Non-interest expenses were $17.77 billion, up 3.1%. The rise was due to higher revenue-related expenses and investments in people, technology, operations and brand. Our estimate for non-interest expenses was $17.63 billion.
The efficiency ratio was 64.59%, down from 66.36% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
Bank of America’s Credit Quality: Mixed Bag
Provision for credit losses was $1.48 billion, up 12.2% from the prior-year quarter. We estimated the metric to be $1.18 billion.
Net charge-offs declined 3.1% to $1.45 billion. As of March 31, 2025, non-performing loans and leases as a percentage of total loans were 0.55%, down 1 basis point.
BAC’s Capital Position Strong
Book value per share as of March 31, 2025, was $36.39 compared with $33.71 a year ago. Tangible book value per share end was $27.12, up from $24.79.
At the end of March 2025, the common equity tier 1 capital ratio (advanced approach) was 13.3%, compared with 13.4% as of March 31, 2024.
BAC’s Share Repurchase Update
In the reported quarter, the company repurchased shares worth $4.5 billion.
Our Take on Bank of America
Bank of America’s focus on digitizing and expanding operations, decent loan growth and relatively lower interest rates are likely to keep supporting growth. However, elevated expenses and funding costs and a challenging operating backdrop pose major headwinds.
Bank of America Corporation Price, Consensus and EPS Surprise
Wells Fargo (WFC - Free Report) reported its first-quarter 2025 adjusted earnings per share of $1.27, which surpassed the Zacks Consensus Estimate by 3.3%. In the prior-year quarter, the company reported earnings per share of $1.26.
Wells Fargo’s results benefited from a slight improvement in non-interest income and declines in provisions and non-interest expenses. However, the decrease in NII was an undermining factor.
Solid trading performance, impressive growth in credit card and wholesale loans and decent IB performance drove JPMorgan’s (JPM - Free Report) first-quarter 2025 earnings of $5.07 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.62.
Robust markets revenues, decent mortgage banking income performance and a rise in NII majorly supported JPMorgan’s quarterly numbers. On the other hand, higher non-interest expenses and a jump in provisions were the undermining factors.
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Bank of America Q1 Earnings Top on Robust Equity Trading, Higher NII
Bank of America’s (BAC - Free Report) first-quarter 2025 earnings of 90 cents per share surpassed the Zacks Consensus Estimate of 81 cents. The bottom line compared favorably with adjusted earnings of 83 cents in the prior-year quarter.
BAC shares are up more than 3.5% in early trading in response to better-than-expected quarterly performance.
Behind BAC’s Headline Numbers
Bank of America recorded an improvement in trading numbers for the 12th straight quarter. Sales and trading revenues (excluding net DVA) grew 9% to $5.65 billion, representing the highest number in a decade. Fixed-income trading fees increased 4.7%, while equity trading income jumped 16.7%. We had projected sales and trading revenues (excluding net DVA) of $4.85 billion.
This, along with higher net interest income (NII), was the major revenue growth driver for Bank of America. NII grew on a year-over-year basis, driven by relatively lower deposit costs and fixed-rate asset repricing. Management projects NII to grow sequentially to almost $15.5-$15.7 billion by the fourth quarter end.
On the other hand, total investment banking (IB) performance was subdued. The IB fees (in the Global Banking division) of $847 million were relatively stable as the plunge in equity underwriting income was almost offset by the improvement in advisory revenues and higher debt underwriting income.
Further, provisions and non-interest expenses increased during the quarter.
The company’s net income applicable to common shareholders grew 13.8% from the prior-year quarter to $7 billion. Our estimate for the same was $6.19 billion. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
BAC’s Revenues Improve, Expenses Rise
Net revenues were $27.37 billion, which beat the Zacks Consensus Estimate of $26.86 billion. The top line also increased 6% from the prior-year quarter.
NII (fully taxable-equivalent basis) grew 2.8% to $14.59 billion. Our estimate for NII was $14.55 billion. Net interest yield remained stable at 1.99%. We expected the metric to be 1.97%.
Non-interest income increased 9.6% to $12.92 billion. This was driven by higher total fees and commissions. We had projected a non-interest income of $12 billion.
Non-interest expenses were $17.77 billion, up 3.1%. The rise was due to higher revenue-related expenses and investments in people, technology, operations and brand. Our estimate for non-interest expenses was $17.63 billion.
The efficiency ratio was 64.59%, down from 66.36% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
Bank of America’s Credit Quality: Mixed Bag
Provision for credit losses was $1.48 billion, up 12.2% from the prior-year quarter. We estimated the metric to be $1.18 billion.
Net charge-offs declined 3.1% to $1.45 billion. As of March 31, 2025, non-performing loans and leases as a percentage of total loans were 0.55%, down 1 basis point.
BAC’s Capital Position Strong
Book value per share as of March 31, 2025, was $36.39 compared with $33.71 a year ago. Tangible book value per share end was $27.12, up from $24.79.
At the end of March 2025, the common equity tier 1 capital ratio (advanced approach) was 13.3%, compared with 13.4% as of March 31, 2024.
BAC’s Share Repurchase Update
In the reported quarter, the company repurchased shares worth $4.5 billion.
Our Take on Bank of America
Bank of America’s focus on digitizing and expanding operations, decent loan growth and relatively lower interest rates are likely to keep supporting growth. However, elevated expenses and funding costs and a challenging operating backdrop pose major headwinds.
Bank of America Corporation Price, Consensus and EPS Surprise
Bank of America Corporation price-consensus-eps-surprise-chart | Bank of America Corporation Quote
Currently, BAC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of BAC’s Peers
Wells Fargo (WFC - Free Report) reported its first-quarter 2025 adjusted earnings per share of $1.27, which surpassed the Zacks Consensus Estimate by 3.3%. In the prior-year quarter, the company reported earnings per share of $1.26.
Wells Fargo’s results benefited from a slight improvement in non-interest income and declines in provisions and non-interest expenses. However, the decrease in NII was an undermining factor.
Solid trading performance, impressive growth in credit card and wholesale loans and decent IB performance drove JPMorgan’s (JPM - Free Report) first-quarter 2025 earnings of $5.07 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.62.
Robust markets revenues, decent mortgage banking income performance and a rise in NII majorly supported JPMorgan’s quarterly numbers. On the other hand, higher non-interest expenses and a jump in provisions were the undermining factors.