Banking major Bank of America Corporation (NYSE: BAC) posted mixed results for the second quarter ended June 30, 2022. The mixed results were due to revenue exceeding expectations but earnings falling short.
Don't Miss Our Christmas Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Following the results, shares of the company are trading marginally down in the pre-market hours.
Revenues Rise, Earnings Drop
Bank of America reported quarterly revenues of $22.7 billion, a growth of 5.6% from the previous year. The figure also topped the consensus estimate of $22.67 billion. The rise in revenue can be attributed to the 21.7% year-over-year growth witnessed in net interest income. In terms of segmental performance, a growth of 11.6% and 7.3% in revenues from consumer banking and global wealth and investment, respectively, drove the overall growth in revenues for the company.
However, the company’s earnings per share (EPS) declined 29.1% from the prior year to $0.73. Moreover, the figure missed the consensus estimate of an EPS of $0.75 per share.
Key Metrics: A Sneak Peek
Bank of America’s average loan and lease balance went up by 12% from the previous year to $1 trillion. Average deposits also increased by 7% from the prior year to $2 trillion.
The company’s common equity tier 1 capital ratio weakened from 11.5% in the prior year to 10.5%.
Further, all of the company’s performance ratios dropped from the previous year. In the second quarter, the company reported return on average assets, average common shareholders’ equity, and average tangible common shareholders’ equity of 0.79%, 9.93%, and 14.05% compared to 1.23%, 14.33%, and 19.90% in the previous year, respectively.
Management’s Commentary
CEO of Bank of America, Brian Moynihan, said “Our U.S. consumer clients remained resilient with continued strong deposit balances and spending levels. Loan growth continued across our franchise and our markets teams helped clients navigate significant volatility reflecting economic uncertainty. As we enter the second half of the year, we believe we are well-positioned to deliver for our shareholders while continuing to invest in our people, businesses and communities.”
Wall Street’s Take
Overall, the Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 10 Buys and five Holds. The BAC average price target of $42.96 implies the stock has upside potential of 33.2% from current levels. Shares have declined 10.9% over the past year.
Website Traffic: Mixed Bag Like the Results
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Bank of America’s performance this quarter.
According to the tool, the Bank of America website recorded a 7.40% monthly rise in global visits in June, compared to the same period last year. However, year-to-date, Bank of America website traffic decreased by 12.42%, compared to the previous year.
The TipRanks Website Traffic tool presented a mixed picture about the Bank of America’s website traffic. This acted as a timely precursor to the company’s mixed results for the quarter. Learn how Website Traffic can help you research your favorite stocks.
Key Takeaways
Even amid global economic headwinds, Bank of America’s top line witnessed an increase from the previous year, which is an impressive feat. Further, growth in the balance sheet in the form of average loan and deposit balances reflects the strength of the company’s operations. However, the decline in key return ratios and depleting capital ratios remain concerns for the company.
Read full Disclosure
