The Bank of America cost cutting machine dropped for another quarter.
The second-largest US lender said the second quarter earnings rose 33 percent to 6.8 billion dollars, exceeding 5.2 billion dollar analysts surveyed by FactSet. CEOs said it was the 14th straight quarter the company showed a positive increase in business, or increased profit by turning the levers including costs.
The Charlotte, North Carolina-based bank said that it managed to increase revenue while spending expenses more than analysts had expected. The lender trimmed costs by 5 percent to $ 13.3 billion and hit 13.5 billion forecasts for analysts investigated by Thomson Reuters. Revenues increased by 3 percent to $ 22.6 billion, compared to $ 22.3 billion, excluding one year ago, the company's earnings per share increased 43 percent to 63 cents per share and crushed 57 percent per share estimate.
Still, all of the figures in the bank's income statement for the quarter were the strongest change, a decline of 43 percent in the bank's income tax to $ 1
The company's shares increased 0.7 percent in premarket trading in New York.
CEO Brian Moynihan has cleaned up much of the mess he inherited when a predecessor bought the Sub-prime lender Countrywide Financial a decade ago. He has since focused on reducing the costs methodically, while looking for modest profit opportunities and repeatedly repeating his mantra of "responsible growth". The company benefited from a US economy in growth, lower taxes following the administration's review, higher interest rates and an environment in which consumers still repay loans.
The company provided $ 800 million for loan losses in the quarter, less than the $ 973.5 million expected by analysts. Outstanding loans decreased by half a billion dollars from the first quarter of 2018 to improvements in consumer and commercial debt. While the bank raised loans and leases to $ 935.8 billion, it was below $ 942 billion.
"Responsible growth continued to deliver as a driver for all parts of the company," said Moynihan in a statement. "We grew consumer and commercial loans, we grew up, we grew assets in the Merrill Edge business, we generated more new networking facilities in Merrill Lynch, and we supported more institutional customer activity."
Still, the company's shares have pulled other banks and the larger stock indices this year and decreased by 3.3 percent before Monday. Analysts will be keen to see if Charlotte, North Carolina-based companies keep pace with the industry's loan development and if profit margins on loans are hugged – two fears that have held bank stocks during this year.
Here's what Wall Street is expected:
Outcome: 57 cents per share, 24 percent higher than a year earlier, forecast by Thomson Reuters