By Shelly Melancon (Switzerland)
The newly released Bank of America (BoA) financial report showed a decline in profits for the just-ended quarter. The banking giant’s net income for Q2 2021 was $79 million less than Q2 2020. Also, its Q1 2021 results were far better than this newly released earnings report.
Earnings Details
Without including the debt valuation adjustment (DVA), BoA’s net income was about $935 million, representing a 55% decrease from the previous quarter’s earnings. Furthermore, the bank’s global market revenue declined by about 13% to $4.8 billion compared to the gains from the same period in 2020. Its net income without the DVA also decreased by 16%.
However, non-interest costs rose by almost 30%. This expense stands at about $3.6 compared to the $788 million from last year. Analysts suggest possible reasons for this increase could be more sales and trading expenses and processing claims from state unemployment benefits.
As expected, there was a 39% decrease in the bank’s revenue from fixed income, currencies, and commodities (FICC) for Q2 2021. The FICC income last year was better because macro products had an excellent trading environment.
Also, the credit products enjoyed full-strength market conditions as there was no longer a pandemic-related sell-off. However, more client activity in Asia and derivatives strengthened trading performance and improved equities revenue to about $1.7 billion (approximately a 34% increase).
Bank of America financial results overview. Source: FxNews group
Generally, Q2 2021 net profits from all of the bank’s assets totaled about $9.3 bn (or $1.04 for each diluted share)
This amount indicates:
- Credit loss benefits of about $1.7 billion
- Improved tax benefits of about $2.1 billion, most of which are from re-evaluation of tax-deferred assets in the United Kingdom
Conversely, reduced interest rates resulted in a 6.5% decrease in net interest income (NII) and a 5% decrease in expenses from a net of interest and revenue compared to the same period from last year. Despite a better macroeconomic standpoint, the bank made lesser profits from credit losses provision, which caused a reduction in reserve to about $2.3 billion.
BoA Shares Tumble
After indicating that it doesn’t have any plan in sight to increase its benchmark rate, the BoA shares declined by almost 5.5% during the midday trading. Despite being the largest U.S. Bank with the highest rates of risk exposure, it has been unable to improve its performance. Even though it has changed its rate policies frequently, the bank’s rate performances remain average mainly because rate changes have been unpredictable since 2008 and were made worse by the ravaging covid-19 pandemic.
Its net interest declined by over 6.5% despite a 174% increase in its net income. The firm believed that an increase in loan demand or a rise in interest rates would lead to better earnings. Analysts weren’t sure these forecasts is possible soon. However, they all agreed that if those two factors did come to pass, the bank’s earnings would improve. This would be good news for traders and potential investors.
At Tokenhell, we help over 5,000 crypto companies amplify their content reach—and you can join them! For inquiries, reach out to us at info@tokenhell.com. Please remember, cryptocurrencies are highly volatile assets. Always conduct thorough research before making any investment decisions. Some content on this website, including posts under Crypto Cable, Sponsored Articles, and Press Releases, is provided by guest contributors or paid sponsors. The views expressed in these posts do not necessarily represent the opinions of Tokenhell. We are not responsible for the accuracy, quality, or reliability of any third-party content, advertisements, products, or banners featured on this site. For more details, please review our full terms and conditions / disclaimer.