Bank of America (BAC.US) - company shares are gaining 2.55% at the Wall Street opening after better-than-expected quarterly results:
- FICC Trading Revenue: The bank reported FICC trading revenue of $2.76 billion, beating the estimate of $2.44 billion.
- Net Revenue: Revenue net of interest expense for the bank stood at $25.20 billion, outpacing the estimate of $24.97 billion.
- Net Interest Income: $14.29 billion, versus estimate $14.3 billion
- EPS (Earnings Per Share): 88 cents.
- Standardized CET1 (Common Equity Tier 1) Ratio: reported at 11.6%, slightly higher than the estimate of 11.4%.
- Loans: The bank reported loans worth $1.05 trillion, in line with the estimate of $1.05 trillion.
- Total Deposits: Total deposits reported by the bank were $1.88 trillion, beating the estimated figure of $1.85 trillion.
Bank of America reported better-than-expected profits for the second quarter, driven by its trading arm and higher interest rates. The bank saw profits increase 19% year-on-year to $7.4 billion, beating analysts' expectations of $6.9 billion. Revenue from bond, commodities, and currency trading grew by 18%, as clients sought help navigating interest rate increases. Furthermore, the bank's net interest income, the difference between what it pays depositors and what it earns from loans and investments, rose 14% year-on-year to $14 billion. However, the bank's decision three years ago to direct $625 billion from pandemic-era deposit inflows into the debt markets has continued to affect its interest income due to unrealized losses in the bond portfolio. Shares of Bank of America rose slightly in pre-market trading following the earnings news.
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** The dashboard presents net profit and total revenue, hence these values differ from the summary, where net revenues were given.
Morgan Stanley (MS.US) - company shares are gaining 1.2% at the Wall Street opening after solid, but with some metrics slightly lower than expected, quarterly results:
- FICC Trading Revenue: $1.72 billion, missing the Bloomberg Consensus estimate of $1.97 billion.
- Net Revenue: $13.46 billion, an increase of 2.5% year over year (y/y). This surpassed the Bloomberg Consensus estimate of $13.11 billion.
- Net Interest Income: $2.01 billion, versus estimate $2.21 billion
- EPS: $1.24, down from $1.39 y/y.
- Standardized Common Equity Tier 1 (CET1) Ratio: 15.5%, which is above the estimated 15%.
Morgan Stanley experienced a fall in profits due to a global slowdown in deal making and trading, with its net income dropping 13% y/y to $2.2 billion. This is the lowest level in over three years. Its revenue, however, was up 2% from a year ago at $13.5 billion. The firm's trading revenues were slightly below expectations, with revenues for both equities and fixed income trading falling significantly from a year ago and the previous quarter. Nonetheless, the firm's wealth management business, which saw a 16% increase in revenues to $6.7 billion, managed to buffer some of these weaknesses. The results point towards a broader slowdown in investment banking and trading among big banks. The upcoming results from Goldman Sachs, a firm heavily reliant on deal making and trading for revenue, are expected to show significant declines in both areas.
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