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Bank of America drops by 2% in the stock market following performance results on Wednesday

  • BoA cites repurchase of shares and increase in trading revenue for upbeat quarterly profit.
  • BoA posts 74 cents of earnings per share against the analysts' estimate of 68 cents.
  • BoA quarterly revenue dropped by 1% to $22.35 billion against the experts' forecast of $22.5 billion.
  • Bank of America expects lower net interest income in 2020's first half.
  • Bank of America surged 40% in 2019 versus the annual growth of 29% in the S&P500.

The Bank of America (BoA) announced its quarterly performance results for the fourth quarter on Wednesday. The company cited its repurchase of shares and a sharp increase in trading revenue to have contributed to the better than expected profit in the recent quarter.

The bank revealed to have made $7 billion in profit in Q4 that marked a 4% decline as compared to the same quarter last year. According to Refinitiv, analysts had expected the company to post 68 cents of earnings per share (EPS). Wednesday’s report, however, noted a slightly higher 74 cents of earnings per share for the Bank of America in the fourth quarter. The estimate for revenue, on the other hand, was capped at $22.35 billion while the earnings report highlighted a 1% drop in revenue that was printed at $22.5 billion in the recent quarter.

BoA Expects Lower Net Interest Income In 2020’s First Half

Following the performance results, BoA’s executives highlighted that the bank is expecting to post lower net interest income in 2020’s first half as compared to 2019’s Q4. The announcement saw the share prices drop by 2% later on Wednesday. On the profit front, only the global markets business out of the three primary divisions of the Bank of America noted a quarterly growth. With $574 million in earnings, the Wall Street trading division saw a 13% hike while the revenue generated from bond trading climbed 25% to $1.8 billion. Lastly, revenue from stock trading dropped by 4% in the fourth quarter and was recorded at $1 billion.

As per Wednesday’s data, the Bank of America’s core operations (lending and banking) were broadly affected by the lower interest rates. The company printed $12.3 billion in net interest income that marked a 3% decline. The net interest margin also dropped by 17 basis points and was recorded at 2.35%. Analysts’ had anticipated 2.36% for the net interest margin.

BoA’s Retail Division Saw A Massive 10% Decline In Profit

BoA’s retail division saw a massive 10% decline in profit ($3.1 billion) that was also associated with the lower interest rates, as per the analysts. Interest rates were also blamed for poor revenue from the wealth management and global banking divisions.

The Bank of America is one of the largest lenders in the United States, second only to J.P Morgan Chase. The bank surged 40% in the stock market in 2019 that was reported remarkably higher than the 29% annual growth in the S&P 500. At the time of writing, the stock is exchanging hands at $34.67.

About the author

Michael Harris
Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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