Bank of America traders get boost from market volatility

Bloomberg

Bank of America Corp (BofA) joined Wall Street rivals in capitalising on market volatility while also benefiting from an increase in lending.
The company’s trading operation posted $4.72 billion in revenue, down just 7.1% from a year earlier after analysts expected a 16% decline. The best results were in the equities business, which posted a 9.5% gain, the Charlotte, North Carolina-based company said in a statement.
Traders across the US finance industry had a better-than-expected first quarter as Russia’s invasion of Ukraine compounded volatility already simmering on inflation concerns and a lingering pandemic. Goldman Sachs Group Inc. and Morgan Stanley posted surprise increases in trading revenue last week, while Citigroup Inc. and JPMorgan Chase & Co. also surpassed analysts’ expectations for quarterly
results.
Bank of America shares rise 0.9% to $37.89 in early New York trading. They’ve declined 5.8% in the past 12 months, compared with a 5.6% decrease for the KBW Bank Index.
Net interest income rises 13% to $11.6 billion. The company’s loan balances rise to $993.1 billion at the end of the first quarter, up 10% from a year earlier and more than analysts’ estimates of $986.4 billion. Lending has been a key focus for investors, with government stimulus programs keeping demand weak for much of 2021 and historically low interest rates hurting net interest income, the revenue collected from loan payments minus what depositors are paid. But dwindling federal-aid programs and rising rates are starting to turn that around.
The increase in net interest income was “supported by strong loan and deposit growth,” Chief Financial Officer Alastair Borthwick said in the statement. “Going forward, and with the forward curve expectation of rising interest rates, we anticipate realizing more
of the benefit of our deposit franchise.”
JPMorgan said last week that commercial loans rose and consumer loans excluding credit cards fell in the first quarter from a year earlier. At Wells Fargo & Co., credit-card, auto, personal and commercial loans all increased.
At Bank of America, investment-banking revenue fell 35% to $1.46 billion, while advisory fees totaled $473 million, up 18% from a year earlier. Wall Street’s dealmaking boom came to an abrupt halt amid gyrating markets and rampant inflation, cutting into fee revenue at banks. Debt-underwriting revenue fell 16% to $831 million, while equity underwriting slumped 75% to $225 million.