Bank of America Merrill Lynch beats Wall Street forecasts with record second-quarter earnings

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Bank of America Merrill Lynch posted a record $0.74 in second-quarter earnings per share, outpacing the $0.71 expected by Wall Street analysts surveyed by Bloomberg. However, revenue fell short of expectations.

Sales and profits rose in the consumer banking and global wealth and investment management divisions, but fell in the global banking and global markets segments.

Here are the key numbers:

  • Adjusted net income: $7.35 billion versus the $6.81 billion estimate
  • Earnings per share: $0.74 versus the $0.71 estimate
  • Revenue: $23.08 billion versus the $23.16 billion estimate
  • Expenses: $13.26 billion

“Our commitment to responsible growth resulted in the best quarter and first-half year of earnings in our company’s history, said BAML CEO Brian Moynihan in the statement. “In the second quarter, we generated $7.3 billion in earnings and delivered $7.9 billion back to shareholders. Our return on assets was over 120 basis points and our return on equity was well above the firm’s cost of capital.”

“Our view of the economy reflects the activity by the one-in-two American households we serve, which points to a steadily growing economy,” he added. “We see solid consumer activity across the board, with spending by Bank of America consumers up five percent this quarter over the second quarter of last year.”

Revenue climbed 5% and net income jumped 13% in BAML’s consumer banking segment, reflecting growth in deposits and loans along with higher short-term interest rates. Revenues rose 3% and net income leaped 11% in the global wealth and investment management segment, driven by higher interest rates and growth in deposits and loans.

However, revenue dipped 1% and net income slid 9% in the global banking business as growth in deposits and loans was outweighed by the bank’s allocation of asset and liability management activities and tighter loan spreads. Similarly, revenue fell 2% and net income dropped 7% in the global markets segment, reflecting weaker sales and trading revenue and lower investment banking fees.

BAML’s average loan and lease balances swelled by 4% to $906 billion, while its average deposit balances rose 6% to $1.4 trillion. The bank also completed $6.5 billion in stock buybacks and paid out $1.4 billion in dividends.