Instant View: Bank of America earnings beat forecasts

NEW YORK (BestGrowthStock) – Bank of America Corp, the largest U.S. bank by assets, on Friday reported much better than forecast earnings, as five of the company’s six major business units were profitable in the period.

Net income for the Charlotte, North Carolina-based company rose to $2.83 billion, or 28 cents per share, from $2.81 billion, or 44 cents per share, a year earlier.

Analysts forecasted on average a profit of 9 cents per share, according to a survey of 23 analysts by Thomson Reuters I/B/E/S.

Revenue decreased 11 percent to $32.3 billion.

The following is reaction from industry analysts and investors:

DAVID DIETZE, PRESIDENT AND CHIEF INVESTMENT STRATEGIST, POINT VIEW FINANCIAL SERVICES IN SUMMIT, NJ

“It follows in the path of JPMorgan, beating on the bottom line. We like the improvement in the Tier 1 capital ratio, but note that it’s not quite as strong as JPMorgan’s.”

“Beating the Street’s expectation for credit losses — to me that reflects better confidence than had been expected in their book of loans…They also ended the spell of continuing revenue declines…At the end of the day, in these very complicated businesses you can’t fake a dollar of revenue. To see the improvement and the cash coming in has to warm the hearts of Bank of America holders and because of its bellwether status as the consumer banking giant in America…It has to send very good vibrations in so far as the health of the economy is concerned.”

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK & CO., NEW YORK

“It looks like low loss reserves and strong growth at Merrill Lynch helped to boost numbers.

“Even those these stocks have rallied a lot, the benefit that JPMorgan and Bank of America have is that the have these well diversified businesses; they have large capital market exposure that could help to offset issues in other lines of their business. But at the same time lower loan loss provisions and their comments that they seen continued improvement in that – that also is a nice boost.

“But the upside I’m seeing in Bank of America and JPMorgan I don’t expect to see to the same extent in the regional banks because of their lack of diversification and capital markets. So yes, the credit situation seems to be getting a little better but the capital markets business is helping a lot.”

TIM HUGHES, HEAD OF SALES TRADING, IG INDEX, LONDON

“We had banks like JPMorgan and now Bank of America who uniformly not only performed incredibly well and are continuing to rebound but they’re beating expectations. It means from the banks’ point of view, a continuation of a return to normal and a vote of confidence in the underlying business.”

THOMAS RUSSO, PARTNER AND PORTFOLIO MANAGER, GARDNER RUSSO & GARDNER, OVERSEES AROUND $3 BLN, LANCASTER, PENNSYLVANIA:

“It’s clear that the environment for making profitable new loans is pretty good. This has been a pretty good time to be in the banking business. The more the banks earn, the less at risk they are. They’re building capital at pretty rapid rates, so banks have more capacity to absorb the problems that still lurk. Banks probably haven’t turned the corner yet, but they can absorb what lurks around the corner.”

DAVID MORRISON, MARKET STRATEGIST, GFT GLOBAL MARKETS, LONDON

“Absolute blow-out report from Bank of America, well above expectations. But I’m not quite sure what it tells us because it is so far above, so what guidance were analysts given. Great results, but so what!”

JOHN HAYNES, HEAD OF RESEARCH, RENSBURG SHEPPARDS, LONDON

“Clearly both (Bank of America and General Electric) are bellwethers covering a large section of the waterfront in their sectors so if they are seeing better trends, then this should read through to other parts of the economy.”

KEITH BOWMAN, ANALYST, HARGREAVES LANSDOWN, LONDON

“Certainly the headline figure looks to be well above expectation and from what we’re hearing, the indication for early trade is in the upward direction.”

MICHAEL HOLLAND, CHAIRMAN, HOLLAND & CO, NEW YORK

“Across the board they have benefited in this change in the weather. They were hit by a significant hurricane a year ago and now if anything they have a strong wind behind their backs. They’ve been taking advantage of that very favorable win. That’s the only way you can get to a number like that. This is a wonderful outcome for Brian Moynihan in his first quarter.”

“He’s reflecting the same very positive signs that Jamie Dimon cited a few days ago and that they are seeing economic strength pretty much across the board and they are taking advantage of it.”

(Reporting by Steve Eder, Elinor Comlay, Ed Krudy and Dan Wilchins in New York and Jon Hopkins, Simon Falush, Harpreet Bhal and Tricia Wright in London)

Instant View: Bank of America earnings beat forecasts