Bank of America (BAC) declared its 1Q16 earnings on April 14, 2016. It reported EPS (earnings per share) of $0.21. That was 16% below analyst estimates of $0.25. On an adjusted basis, EPS was $0.20, slightly below Bloomberg estimates. BAC shares rose 2.5% in value intraday despite the earnings miss.
BAC’s chief financial officer Paul Donofrio said during a conference call with journalists, “In quarters like this, revenue is going to be challenged. Markets were volatile, and long-term interest rates declined significantly.”
CEO (chief executive officer) Brian Moynihan said in a press release, “Despite volatile markets, our Global Markets business produced solid earnings. As always, we are focused on loan and deposit growth and managing expenses.” He added, “By doing that, we continue to improve on what we do best: helping consumers live their financial lives and helping businesses grow and employ more people.”
Bank of America is an American multinational bank. On April 14, 2016, it had a market capitalization of $148 billion. It’s the second-largest bank holding company in the United States (SPY) by assets. As of December 2014, BAC had assets of $2.1 trillion and revenues of $85.1 billion. The bank’s 2008 acquisition of Merrill Lynch made Bank of America the world’s largest wealth management corporation and a major player in the investment banking market.
The company operates in the following five segments:
- Consumer & Business Banking
- Consumer Real Estate Services
- Global Wealth & Investment Management
- Global Banking
- Global Markets
Next, let’s see what factors led to Bank of America’s weak earnings in 1Q16.