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Bank of America’s BAC first-quarter 2025 earnings of 90 cents per share surpassed the Zacks Consensus Estimate of 81 cents. The bottom line compared favorably with adjusted earnings of 83 cents in the prior-year quarter.
BAC shares are up more than 3.5% in early trading in response to better-than-expected quarterly performance.
Behind BAC’s Headline Numbers
Bank of America recorded an improvement in trading numbers for the 12th straight quarter. Sales and trading revenues (excluding net DVA) grew 9% to $5.65 billion, representing the highest number in a decade. Fixed-income trading fees increased 4.7%, while equity trading income jumped 16.7%. We had projected sales and trading revenues (excluding net DVA) of $4.85 billion.
This, along with higher net interest income (NII), was the major revenue growth driver for Bank of America. NII grew on a year-over-year basis, driven by relatively lower deposit costs and fixed-rate asset repricing. Management projects NII to grow sequentially to almost $15.5-$15.7 billion by the fourth quarter end.
On the other hand, total investment banking (IB) performance was subdued. The IB fees (in the Global Banking division) of $847 million were relatively stable as the plunge in equity underwriting income was almost offset by the improvement in advisory revenues and higher debt underwriting income.
Further, provisions and non-interest expenses increased during the quarter.
The company’s net income applicable to common shareholders grew 13.8% from the prior-year quarter to $7 billion. Our estimate for the same was $6.19 billion. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
BAC’s Revenues Improve, Expenses Rise
Net revenues were $27.37 billion, which beat the Zacks Consensus Estimate of $26.86 billion. The top line also increased 6% from the prior-year quarter.
NII (fully taxable-equivalent basis) grew 2.8% to $14.59 billion. Our estimate for NII was $14.55 billion. Net interest yield remained stable at 1.99%. We expected the metric to be 1.97%.
Non-interest income increased 9.6% to $12.92 billion. This was driven by higher total fees and commissions. We had projected a non-interest income of $12 billion.
Non-interest expenses were $17.77 billion, up 3.1%. The rise was due to higher revenue-related expenses and investments in people, technology, operations and brand. Our estimate for non-interest expenses was $17.63 billion.
The efficiency ratio was 64.59%, down from 66.36% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.