Bank of America beat analysts’ estimates for profit as it cut expenses more than expected and posted a 25% surge in earnings at its consumer banking division.
The bank said first quarter profit rose 6% to $7.3 billion, or 70 cents a share, according to a Tuesday release, exceeding analysts’ estimate of 66 cents a share. Revenue was roughly unchanged from a year earlier at $23 billion, essentially meeting analysts’ estimates.
Expenses came down 4% to $13.2 billion, almost $500 million below analysts’ estimate.
“Economic growth and consumer activity in the U.S. continue to be solid, businesses of every size are borrowing and driving the economy, and asset quality is strong,” CEO Brian Moynihan said in the release. “It was a challenging capital markets environment but our team and platform are optimized to serve clients and generate stable revenues across a range of market conditions over time.”
Shares of the bank dipped 1% in premarket trading at 6:59 a.m.
Under Moynihan, the second biggest U.S. lender delivered its 17th straight quarter of operating leverage as it cuts expenses.
Moynihan has focused on methodically trimming costs while looking for profit opportunities that fit his “responsible growth” mantra. More recently, he has announced that the company’s success will be shared with employees: The bank is raising its minimum wage to $20 an hour over the next two years, the highest rate among the megabanks.
To tighten its grip on retail banking customers, Bank of America is also planning to release a digital financial coach for its 66 million customers in the fall.
The bank’s shares have climbed more than 20% this year, outperforming most of its peers and the KBW Bank Index.
Here’s what Wall Street expected:
Earnings: 66 cents a share, a 5.7% increase from a year earlier, according to Refinitiv.
Revenue: $23.3 billion, almost unchanged from a year earlier.
Noninterest expense: $13.7 billion, according to FactSet
Trading Revenue: Fixed income $2.26 billion, Equities $1.21 billion