Bank of America reported first-quarter profits that surpassed Wall Street's expectations, driven by robust consumer spending, resilient credit conditions, and stronger-than-anticipated trading revenues. The bank posted earnings of 90 cents per share, well ahead of analysts' estimates of 82 cents, with total revenue increasing nearly 6% to $27.51 billion against expectations of $26.99 billion.
Net interest income, a key profitability measure reflecting earnings from loans and deposits, rose to $14.6 billion, slightly above market expectations. This gain was primarily attributed to lower deposit costs and higher returns from investments compared to the same period last year.
"Our business clients have been performing well; and consumers have shown resilience, continuing to spend and maintaining healthy credit quality," CEO Brian Moynihan said in a statement. He added, "Though we potentially face a changing economy in the future, we believe the disciplined investments we have made for high-quality growth, our diverse set of businesses, and the team's relentless focus on responsible growth will remain a source of strength."
Trading revenue significantly boosted results, with equities trading revenue jumping 17% to $2.2 billion, narrowly beating the consensus estimate of $2.12 billion. Fixed-income trading also outperformed slightly, rising 5% to $3.5 billion versus an anticipated $3.46 billion, highlighting how the bank capitalized on heightened market volatility.
Investment banking fees, however, declined 3% to $1.5 billion, reflecting broader industry challenges amid global trade uncertainty spurred by President Donald Trump's recent tariff escalations. Analysts had expected fees of around $1.6 billion.
The bank's provision for potential loan losses was better than anticipated at $1.5 billion, coming in below forecasts of $1.58 billion. This measure is closely monitored as banks prepare for potential economic downturns, particularly in the wake of intensified trade conflicts and recession fears.
Bank of America's shares have been pressured this year, declining over 16% amid mounting concerns that trade disruptions and tariff hikes could prompt a recession. Although the bank's stock rose modestly by less than 2% in premarket trading following these strong results, market unease persists.
Consumer spending remained resilient, with credit and debit card usage rising by 4% compared to the previous year. JPMorgan Chase previously reported similar strength, although it suggested spending could reflect consumer anticipation of higher prices due to impending tariffs.
