Bank of America Beat
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Bank of America Report’s
Bank of America reported second-quarter profit and revenue that edged out expectations as the company reaped more interest income amid higher rates.
Earnings rose 19% to $7.41 billion, or 88 cents a share, from $6.25 billion, or 73 cents a share, a year earlier.
Revenue climbed 11% to $25.33 billion, fueled by a 14% jump in net interest income to $14.2 billion.
The company's Wall Street operations helped it top revenue expectations in the quarter. Fixed income trading revenue jumped 18% to $2.8 billion, and equities trading slipped 2% to $1.6 billion.
Bank of America was expected to be one of the top beneficiaries of rising interest rates this year, but it hasn't played out that way. The company's net interest income has been questioned lately as loan and deposit growth has slowed.
BofA shares declined about 11% this year before Tuesday, compared with the approximately 20% decline of the KBW Bank Index.
This month, the Consumer Financial Protection Bureau said it fined the Charlotte, North Carolina-based bank for customer abuses including fake accounts and bogus fees. Analysts may ask Moynihan if the problems have been resolved.
In conclusion, Bank of America's second-quarter earnings were slightly better than expected, but the company's net interest income growth has been slower than expected. The bank's shares have declined this year, and analysts may ask CEO Brian Moynihan about the company's progress in resolving customer abuses.
Morgan Stanley reported second-quarter earnings and revenue that topped analysts' expectations, helped by record wealth management results.
Profit declined 13% to $2.18 billion, or $1.24 a share, on lower trading results from a year ago and a round of layoffs that triggered $308 million in severance costs.
Revenue climbed 2% to $13.46 billion.
Wealth management revenue rose 16% to $6.66 billion on higher interest income, exceeding the $6.5 billion estimate of analysts surveyed by FactSet.
The bank's Wall Street division fared less well. The institutional securities business posted an 8% drop in revenue to $5.65 billion, driven by declines in trading.
Investment banking revenue of $1.08 billion was roughly unchanged from a year ago and essentially matched analysts' expectations.
Morgan Stanley shares are up slightly this year, compared with the about 20% decline of the KBW Bank Index.
In conclusion, Morgan Stanley's second-quarter earnings were slightly better than expected, but the company's trading revenue was down from a year ago. The bank's wealth management business continues to be a bright spot, and the company's shares have outperformed the broader market this year.
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