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Bank of America (BAC) reported a robust performance for the second quarter of 2024, with net income reaching $6.9 billion and earnings per diluted share (EPS) at $0.83. This represents a slight decrease from the $7.4 billion net income and $0.88 EPS reported in the same quarter of the previous year.

The bank’s total revenue, net of interest expense, stood at $25.4 billion, marking a 1% year-over-year increase driven by higher asset management and investment banking fees, as well as a boost in sales and trading revenue.

However, this was somewhat offset by a 3% decline in net interest income (NII) to $13.7 billion, attributed to higher deposit costs outpacing asset yields and modest loan growth. The provision for credit losses rose to $1.5 billion from $1.1 billion in the year-ago period, reflecting a net charge-off of $1.5 billion, which remained stable from the previous quarter but increased significantly from $869 million in 2Q23.

The bank also reported a net reserve release of $25 million, a decrease from the $179 million released in the previous quarter. Noninterest expenses increased by 2% to $16.3 billion, driven by investments in personnel and revenue-related compensation.

Average deposit balances grew by 2% to $1.91 trillion, while average loans and leases saw modest growth, reaching $1.05 trillion.
 

Bank of America Beats Q2 EPS and Revenue Expectations

When comparing Bank of America’s 2Q24 performance against market expectations, the results were slightly mixed but generally positive.

The reported EPS of $0.83 exceeded the analysts’ consensus estimate of $0.79, indicating stronger-than-expected profitability. The bank’s revenue of $25.4 billion also surpassed the forecasted $25.24 billion, demonstrating a solid revenue generation capability despite challenging market conditions.

This revenue growth was primarily driven by an increase in noninterest income, which rose by 6% to $11.7 billion, offsetting the decline in NII.

However, the bank faced higher-than-anticipated provisions for credit losses, which increased to $1.5 billion compared to the $1.1 billion provision in the same quarter last year. This rise in credit losses was a result of higher net charge-offs, particularly in the consumer banking segment due to increased credit card losses.

Additionally, the noninterest expense of $16.3 billion was slightly higher than expected, reflecting the bank’s ongoing investments in its workforce and compensation structures. Despite these challenges, the bank’s return on average common shareholders’ equity (ROE) remained strong at 10.0%, albeit lower than the 11.2% reported in 2Q23.
 

BAC Plans to Increase Quarterly Dividend by 8%

Looking ahead, Bank of America provided optimistic guidance for the upcoming quarters, emphasizing continued investments in its core businesses and strategic initiatives. The bank announced plans for an 8% increase in its quarterly common stock dividend to $0.26 per share, pending board approval.

The bank’s Chief Financial Officer, Alastair Borthwick, highlighted the diverse businesses leveraging innovative platforms and services, which have been instrumental in attracting new client relationships and delivering strong financial performance.

The bank’s capital position remains robust, with a Common Equity Tier 1 (CET1) ratio of 11.9%, comfortably above the regulatory minimum that will take effect on October 1, 2024. The bank’s average global liquidity sources stood at $909 billion, indicating a strong liquidity position to support future growth.

Furthermore, the bank’s tangible book value per common share increased by 9% year-over-year to $25.37, underscoring the bank’s ability to generate tangible value for its shareholders. The bank’s return on average tangible common shareholders’ equity (ROTCE) was 13.6%, reflecting efficient capital utilization.

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