Bank of America records a 45% lower profit in the first quarter

Bank of America (NYSE:BAC) released its financial results for the first quarter on Wednesday that missed analysts’ estimates for earnings and revenue. Following the earnings report, the Bank of America was reported around 7% down in premarket trading on Wednesday.

BoA’s Financial Results Versus Analysts’ Estimates

According to Refinitiv, experts had forecast the Bank of America to print £18.33 billion in revenue in the first quarter. They had anticipated the American multinational investment bank to make 36.82 pence of earnings per share. In its financial report on Wednesday, however, the bank posted a lower revenue of £18.25 billion in the recent quarter while it made 32 pence of earnings per share.

In terms of net interest income, analysts had estimated the Bank of America to record £9.37 billion in Q1. On the bond-trading front, they had forecast the investment bank to generate £1.99 billion from its fixed-income division and another £1.11 billion from equities.

According to the Bank of America, however, the first quarter recorded its net interest income at a much higher £9.85 billion. Bond-trading results also came stronger than expected with the bank generating £2.16 billion in revenue from fixed income and £1.36 billion from equities.

The U.S-based multinational investment bank also accentuated in its statement on Wednesday that it set aside roughly £2.88 billion for an expected surge in loan defaults due to the ongoing Coronavirus pandemic.

At £3.21 billion, the Bank of America’s total profit in the first quarter marked a massive 45% decline as compared to the same quarter last year. The consumer banking business posted a 45% decline in profit in Q1 to £1.43 billion while its wealth management unit recorded its quarterly profit 17% lower at £693.23 million.

Quarterly Profit Increased By 33% In The Trading Division

The Bank of America’s trading division was the only one in the first quarter that noted an increase in quarterly profit. At £1.18 billion, profit from this division was reported 33% higher.

BoA’s Chief Executive Officer, Brian Moynihan commented on the earnings report on Wednesday and stated:

“Our results reflect the strength of our balance sheet, the diversity of our earnings, and the resilience of our teammates to serve clients around the world. Despite increasing our loan loss reserves, we earned £3.20 billion this quarter.”

The Bank of America is currently trading more than 15% down year to date in the stock market. It is valued at £155.29 billion and has a price to earnings ratio of 8.07.