Bank of America’s (BAC) first-quarter top- and bottom-line results fell year over year amid a drop in net interest income, which the bank said will likely hit a trough in the current quarter before rebounding later this year.
Revenue, expressed as the sum of net interest and noninterest income, dipped to $25.82 billion for the three months ended March 31 from $26.26 billion a year ago but topped the $25.39 billion average analyst estimate on Capital IQ. GAAP earnings per share dipped to $0.76 from $0.94 and missed the Street’s view by a penny.
Net interest income, or NII, was $14.03 billion, down from $14.45 billion a year ago. Sequentially, NII rose from $13.95 billion amid benefits of higher-yielding assets and an improvement in global markets NII, Chief Financial Officer Alastair Borthwick told analysts on a conference call, according to a Capital IQ transcript.
“Good deposit growth provided a strong start to the year for NII,” Borthwick said on the call.
Noninterest income dipped to $11.79 billion from $11.81 billion on an annual basis. Noninterest expense increased 6% year over year to $17.24 billion and included a $700 million charge to replenish the Federal Deposit Insurance Corp.’s insurance fund for 2023’s bank failures. The lender recorded $1.3 billion in provision for credit losses, compared with $931 million in the same period of 2023.
By segment, consumer banking revenue decreased 5% to $10.17 billion, driven by lower deposit balances. Global banking revenue dropped 4% on an annual basis to $5.98 billion on lower net interest income. Global markets revenue increased 5% to $5.88 billion, driven by stronger investment banking fees, sales and trading revenue. Global wealth and investment management advanced 5% to $5.59 billion, reflecting higher asset management fees on elevated market levels and strong asset under management flows.
For the second quarter, Borthwick told analysts that Bank of America continues to expect NII to reach a low point in the current quarter and then rebound in the second half of the year. The bank forecasts a modest impact of lower deposits in wealth management as clients pay seasonal tax payments. He said global markets NII is projected to decline that would also reflect seasonality.
Expenses are expected to decline sequentially in the second quarter and continue to trend down through the remainder of the year, Borthwick said.