Even strong fish can't fight a larger current. Bank of America
For the second quarter, revenue grew about 7%, while net income increased by 12%. With a flattened yield curve and the resulting compression in net interest margin, the bank saw net interest income (on a fully taxable equivalent basis) grow only 1% from the year-ago period. On a brighter note, non-interest income increased more than 16%.
Like many other companies with capital-markets businesses, Bank of America saw some rough results this quarter. Trading revenue dropped 40%, and the company's investment-banking profits also fell. All told, revenue declined 19%, though reported earnings were up 12% because of the absence of litigation expense in this quarter.
In banking, the company did see some growth in deposits and loans, plus higher revenue from service charges and credit/debit card volumes. On the other hand, the company also saw higher credit card chargeoffs and that aforementioned shrinkage in net interest margin (from 3.31% a year ago to 2.81% in this quarter).
That said, Bank of America did manage to increase its return on shareholders' equity (17.5% versus the year-ago 16.6%), and the decline in return on assets was rather mild (1.35% versus the year-ago 1.41%).
Bank of America's management certainly hasn't shied away from big acquisitions at home and abroad. As we Fools have discussed before, Bank of America is spending $35 billion to acquire MBNA
I made the case earlier today that Citigroup
More Bank of America takes to catch your interest:
- Bank of America Fights the Hackers
- Bank of America Gets Some Credit
- Bank of America Looks Toward China
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).