Brian Moynihan, the relentlessly steady CEO who has never once said anything that would make a good headline, took the win without blinking. The numbers: $1.11 per share versus the $1.01 estimate, $30.43 billion in revenue versus $29.93 billion expected, net income up 17% to $8.6 billion. The bank beat on essentially every line that mattered.
The hero of the quarter was equities trading, which generated $2.83 billion in revenue, up 30% and roughly $350 million ahead of estimates. When markets are in chaos, somebody is making money on the volatility, and in Q1 that somebody was Bank of America's trading desk, which just put up its best quarter in 15 years. Investment banking chipped in too, up 21% to $1.8 billion.
Net interest income rose 9% to $15.9 billion and beat expectations. BofA had guided for 5-7% NII growth (the magical ingredient in the all important NIM formula) this year and raised that to 6-8% on Wednesday. Fixed income was the one soft spot, coming in about $330 million below estimates, but that's a rounding error against the rest of the scorecard.
The more telling data point is what didn't happen. The provision for credit losses came in at $1.3 billion, below both last year's $1.5 billion and the Street's estimate. Borrowers are holding up.
The net charge-off ratio actually improved. BriMo told CNBC Wednesday that consumers are spending, credit quality is "very good and improving," and corporate clients are using their lines. "Right now, the U.S. companies and consumers are doing well," he said.
When said by the man with the saddest face on wall street, that almost sounds hopeful. Bank of America (BAC) — The company posted record earnings per share, driven by strong equities trading, investment banking, and net interest income growth, indicating robust operational performance. JPMorgan Chase (JPM) — As a major diversified financial institution with significant trading and investment banking operations, JPMorgan Chase is likely to benefit from similar market conditions and strong consumer/corporate credit quality.
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