Bank of America's stock price jumps on Q2 earnings beat

5 Key Takeaways:

1. Bank of America's second-quarter profit and revenue exceeded expectations

2. Earnings per share increased by 19% compared to the previous year, with growth attributed to strategic initiatives and leveraging higher interest rates.

3. Revenue growth of 11% was realized year on year

4. Net interest income saw a significant 14% increase, highlighting the bank's effective management of interest-earning assets and liabilities

5. Bank of America's fixed income trading revenue increased by 18%, while revenue from equities trading saw a slight dip of 2%

Bank of America Q2 2023 results

Bank of America’s second-quarter profit and revenue, surpassed expectations as the company benefited from increased interest income due to higher rates.

The company reported earnings of 88 cents a share, compared to the Refinitiv estimate of 84 cents a share. This represents a 19% increase from the previous year, where earnings were 73 cents a share. This substantial growth in earnings per share can be attributed to the company's strategic initiatives and its ability to leverage higher interest rates.

Bank of America's revenue also exceeded expectations, reaching $25.33billion versus the $25.05 billion expected. This represents an 11% increase from the previous year. The revenue growth was primarily driven by a 14% increase in net interest income, which reached $14.2 billion. The growth in net interest income demonstrates the bank's ability to manage its interest-earning assets and interest-bearing liabilities effectively.

A notable contributor to the company’s revenue growth was from its Wall Street operations. Fixed income trading revenue saw a significant increase of 18%, reaching $2.8 billion. This shows the bank's strength in the fixed income market and its ability to generate substantial revenue from its trading activities.

However, it's worth noting that equities trading slipped by 2% to $1.6 billion. While this represents a slight dip, it does not overshadow the overall positive performance of the company in the second quarter.

Bank of America – trading view

The share price of Bank of America has broken out of a triangle shaped consolidation. The breakout see’s the pattern acting as a reversal of the preceding downtrend rather than a continuation thereof.

30.70 is currently acting as resistance. A close above this level could unlock further gains with 33.40 the upside resistance target. In this scenario, a close below the 29.10 level might be used as a stop loss consideration.