Bank of America (BAC) first-quarter earnings jumped 34 percent in the first quarter and topped analysts’ estimates. The profit was mainly driven by growth in deposits and loans as well as higher interest rates. Another factor behind strong profit was CEO Brian Moynihan’s efforts to limit expenses.
Discussing the results, Moynihan said strong client activity, along with growing global economy and strong U.S. consumer activity resulted in record quarterly profit.
Overall, Charlotte, N.C.-based BofA reported earnings of $6.92 billion in the first quarter, as compared to $5.34 billion in the same period last year. On per share basis, the bank earned 62 cents, beating analysts’ average estimate of 59 cents.
Revenue for the quarter came in at $23.13 billion, up from $22.25 billion in the year-ago quarter. Analysts were looking for $23.06 billion in revenue.
The bank’s trading revenue slightly moved up to $4.05 billion in Q1, while equities revenue climbed 38 percent. However, revenue from fixed income, currency and commodities fell 13 percent.
BofA’s competitors including JPMorgan and Citigroup also released their financial results last week, showing increase in trading revenue.
Investors and analysts will be closely watching earning reports in the banking industry to see how much benefit the banking industry is getting from lower corporate tax rate, which is helping financial institutions lift their earnings.
BofA said its effective tax rate decreased by 9 percentage points following the bill. The bank paid income tax of $1.48 billion in the first quarter, significantly lower than $1.98 billion in the comparable quarter last year.
The bank’s return on equity (ROE) reached 10.85 percent in the quarter, versus 8.09 percent in the same quarter, one year ago.
Increasing interest rate also boosted profit as higher rates help banks to collect higher interest on loans. BofA said that its net interest income jumped nearly 5 percent versus last year.