Bank of America posts better than expected earnings for the second quarter

Bank of America posts better than expected earnings for the second quarter

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Bank of America Corp (NYSE:BAC) posted its biggest quarterly earnings in about four years, mainly due to declining legal expenses and improvement in the US economy. Legal costs dropped to $175 million as compared to last year.

The bank’s non-interest costs declined by a quarter to $13.82 billion in Q2, while net interest income jumped 4.7 percent to $10.49 billion. CFO, Bruce Thompson said the bank’s core net interest income is anticipated to increase over the rest of year.

BofA’s net income increased more than two folds to 45 cents per share, as compared to just 19 cents per share one year. On adjusted basis, earnings were 37 cents per share that topped consensus forecast of 36 cents per share.

Mortgage banking revenue jumped almost twice to $1 billion. Over half of the new mortgage loans in the quarter were for home purchases. Comparatively, Wells Fargo & Co said that revenue from its home-lending segment slipped 1 percent.

Bank of America reported that earnings from investment and brokerage services surged 3 percent to $3.39 billion, whereas its Merrill Lynch Global Wealth Management division was flat at $3.79 billion. Revenue from bond trading dropped 9.3 percent to $2.15 billion.

Litigation costs plummeted to $175 million from $4 billion last year. Chief Executive Officer Brian Moynihan said in a conference call that Merrill Lynch still had to work on managing expenses.

On Tuesday, JPMorgan Chase & Co said that revenue from fixed-income trading declined 21 percent.

Thompson said that Bank of America’s fell 7 percent in the second quarter, versus the same period in 2014 and that he anticipated a further decrease. As of March 31, the bank had 220,000 full-time employees.

Citigroup Inc and Goldman Sachs Group are set to report the financial results on Thursday, while Morgan Stanley will post results on Monday.

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Brayden Fortin is a American with numerous years of investment experience in the American Equity Market and in the Global Commodity Market. He has a B.Com degree from a well respected Canadian university and has experience working in the wealth management industry. He is interested in delving into numbers to analyze companies and markets. He won a couple of international strategy simulation competitions involving decision making through numerical analysis, and also scored in the top 50 on the Bloomberg Aptitude Test (out of nearly 200,000 test takers).

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