Bank of America (BAC) posted one of the company’s best performances since the financial crisis hit, with earnings of $4.2 billion in the second quarter. The performance was a shock for analysts, as the current economic environment is not bank-friendly. Low interest rates are also eating away at bank profit margins from loans.
Investors can learn a lot from the company’s Q2 earnings, with the biggest points to pay attention to being:
1. $4.2 Billion in Quarterly Profits
The bank posted a $4.2 billion profit with an EPS of $0.36 per share. The figure is below the $5.1 billion earnings from the same quarter last year, but the earnings still outpaced expectations. Analysts pegged the company’s EPS at $0.33.
Brian Moynihan, CEO and chairman, stated, “We had another solid quarter in a challenging environment.”
2. The Second Strongest Quarter Since the Financial Crisis
Bank of America’s improved customer and client activity and four business sectors have performed well on the quarter. The company has only had two quarters in the past 7 years that have posted higher earnings: Q2 2015 and Q3 2011.
The company’s 2011 quarter is not counted, as adjustments and one-time gains led to the $7.6 in profit.
3. Bank of America is Turning a Corner
The company has posted strong performances for a few quarters now, and a court order from last year allowed the company to reduce its legal liabilities by $7.4 billion. The company has also closed it’s “bad bank” unit, which deals with non-core and toxic assets. The unit was responsible for $44 billion in losses over a 4-year period between 2011 and 2015.
4. Return on Assets Fell Below the 1% Goal
The bank aims for a 1% gain on assets, but reached just a 0.78% gain. A higher return on assets is important for the company if they hope to boost profits going forward.
