Bank of America Profit Jumps 10%, CEO Cautions on Economy

Bank of America Posts 10% Profit Surge, But CEO Warns of Economic Shift

Bank of America Corp. reported a stronger-than-expected first quarter, with profits climbing 10% year-over-year to $7.4 billion, or $0.90 per share, significantly beating Wall Street forecasts. However, CEO Brian Moynihan cautioned that the bank is preparing for potential changes in the broader economic landscape.

“We potentially face a changing economy,” Moynihan said, adding that while consumers remain resilient and credit quality is solid, shifting conditions warrant a cautious outlook.

The bank’s stock (NYSE: BAC) surged 3.9% on Tuesday, making it one of the top performers on the S&P 500 index.

Trading and Deposits Drive Growth

Bank of America’s quarterly revenue rose 6% to $27.4 billion, surpassing analyst expectations of $26.97 billion. One of the key drivers was a robust performance in its sales and trading segment, which saw an 11% year-over-year increase in revenue to $5.7 billion—marking the twelfth consecutive quarter of growth in that area.

Net interest income, a core metric tied to traditional lending, rose 3% to $14.4 billion. Wealth and asset management revenue also posted solid gains, climbing 8% to $6 billion, fueled by steady fee income.

Moynihan described the overall results as “good,” noting the bank’s success in balancing consumer and commercial performance.
“Our business clients have been performing well; and consumers have shown resilience, continuing to spend and maintaining healthy credit quality,” he said.

Lending and Credit Trends Remain Strong

According to Edward Jones analyst James Shanahan, Bank of America's strong lending activity and higher profit margins were key contributors to the quarterly beat.

“Income from traditional lending activities was also quite strong, supported by improved lending profit margins and loan growth,” Shanahan noted in a research briefing. Loan volume grew by $15 billion during the quarter, a 6% year-over-year increase.

Credit-card spending also ticked higher, with customers spending 4% more for a total of $228 billion.

Meanwhile, average deposit balances rose to nearly $2 trillion, marking a seventh straight quarter of growth. Specifically, average deposit balances climbed 3% to $1.96 trillion in Q1.

Investment Banking Slows, But Outperformance Continues

Although investment banking revenue dipped 3% to $1.5 billion amid a slowdown in deal-making activity, the decline did not overshadow gains in other divisions. Similar to recent earnings updates from JPMorgan Chase and Goldman Sachs, Bank of America benefited from market volatility, which boosted trading revenue.

Despite some weakness in investment banking, the bank’s performance exceeded Wall Street expectations across key financial metrics.

Market Reaction and Share Performance

Bank of America shares closed at $38.16 on Tuesday, gaining $1.49, as investors responded positively to the results. Despite this uptick, BAC stock remains down 16.6% year-to-date, compared with an 8.1% decline in the S&P 500.

Looking Ahead

While the bank’s financial strength and broad-based revenue growth point to a resilient business model, Moynihan’s cautionary tone reflects uncertainty in the macroeconomic environment. With rising concerns about stagflation, interest rate movements, and global trade tensions, the coming quarters could prove more challenging for the banking sector.

Bank of America’s solid first-quarter earnings reinforce the bank’s diversified strengths across lending, trading, and wealth management. Yet with its leadership warning of a potential economic shift, investors are likely to watch future updates more closely.

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