The Bank of America cost-cutting machine hummed along for another quarter.
The second-biggest U.S. lender said that second-quarter profit surged 33 percent to $6.8 billion, exceeding the $5.92 billion estimate of analysts surveyed by FactSet. Executives said it was the 14th straight quarter the firm managed to post positive operating leverage, or increased profit by turning levers including costs.
The bank said it trimmed expenses by 5 percent to $13.3 billion, beating the $13.5 billion forecast of analysts surveyed by Thomson Reuters. Bank of America shares rose 0.9 percent in premarket trading in New York.
Revenue also beat expectations: The firm posted $22.6 billion in company-wide revenue, compared to the $22.3 billion estimate. The figure declined 1 percent from a year earlier when the bank sold a U.K.-based credit-card business. Excluding that year ago-gain, revenue increased 3 percent. The company's earnings per share surged 43 percent to 63 cents per share, beating the 57 cent per share estimate.
"Responsible growth continued to deliver as a driver for every area of the company," Chief Executive Officer Brian Moynihan said in a statement. "We grew consumer and commercial loans; we grew deposits; we grew assets within our Merrill Edge business; we generated more net new households in Merrill Lynch; and we supported more institutional client activity — all of this while we continued to invest in our businesses and began an additional $500 million technology investment, which we intend to spend over the next several quarters, due to the benefits we received from tax reform.”
Here’s what Wall Street expected:
Earnings: 57 cents per share, 24 percent higher than a year earlier, forecast by Thomson Reuters
Revenue: $22.27 billion, 3.4 percent lower than a year earlier, forecast by Thomson Reuters.
Loans: $942 billion, 3.4 percent higher than a year earlier, forecast by Thomson Reuters.
Moynihan has cleaned up much of the mess he inherited when a predecessor purchased subprime lender Countrywide Financial a decade ago. He has since focused on methodically reducing costs while looking for modest profit opportunities, often repeating his mantra of “responsible growth.”
Still, the firm’s shares have trailed other banks and the broader stock indices this year, declining 3.3 percent before Monday. Analysts will be keen to see if the Charlotte, North Carolina-based firm is keeping pace with the industry’s loan growth and if its profit margins on loans is getting squeezed – two fears that have kept bank stocks down this year.
This story is developing. Please check back for updates.
Bank of America CEO Brian Moynihan will appear on CNBC's "Mad Money" at 6 p.m. ET Monday, July 16.
