Financial services giant Bank of America Corp. (BAC) reported Friday a decline in second-quarter net income, while attributable net income increased from last year. Quarterly earnings per share also declined, yet topped market projections. During the quarter, sharply lower provision for credit losses were offset by decline in revenues, which also missed the market view.
Among other financial giants, Citigroup Inc. (C) reported Friday a decline in second-quarter net income on lower revenues, while JPMorgan Chase & Co. (JPM) reported Thursday a 76% rise in net profit, reflecting sharply lower provision for credit losses.
Bank of America's second-quarter net income was $3.123 billion, lower than $3.224 billion in the same quarter last year. Excluding preferred stock dividends and accretion, net income applicable to common shareholders increased to $2.783 billion from $2.419 billion in year ago quarter. After preferred dividends, earnings per share were $0.27, lower than prior year's $0.33.
On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.
In the preceding first quarter, Bank of America had reported net income of $3.182 billion, net income applicable to common shareholders of $2.834 billion, and earnings per share of $0.28.
The company said in a statement that the second-quarter results were "driven by lower credit costs, which improved for the fourth straight quarter, and the sale of non-core assets as the company focused on strengthening key business lines and divesting assets that do not directly contribute to providing financial services to customers."
However, these benefits were partially offset by lower trading account profits, reduced mortgage banking income and higher costs associated with the UK payroll tax on certain year-end incentive payments.
In the second quarter, total revenue, net of interest expense, fell to $29.153 billion from $32.774 billion in the prior year quarter, and also missed nineteen analysts' consensus revenue estimate of $29.75 billion.
Total revenue net of interest expense, on a fully taxable-equivalent or FTE basis, declined 11% to $29.45 billion from last year's $33.086 billion. The year-ago period included gains from the sale of the company's shares in China Construction Bank and the contribution of a merchant services business to a joint venture.
In the preceding first quarter, revenues were $31.97 billion, while FTE revenues were $32.29 billion.
In the latest quarter, net interest income rose to $12.90 billion from $11.63 billion a year ago, and FTE net interest income grew to $13.197 billion from last year's $11.942 billion, reflecting the impact of the adoption of new consolidation guidance.
Noninterest income for the second quarter climbed 23% to $16.253 billion from $21.144 billion a year ago, mainly reflecting decline in equity investment income, mortgage banking income, reduced trading account profits and lower net gains on sales of debt securities.
In the quarter, noninterest expense grew slightly to $17.253 billion from $17.020 billion in the previous year, on higher personnel costs due in part to the U.K. payroll tax, and increased professional fees.
Bank of America's total provision for credit losses was $8.105 billion in the quarter, sharply lower than prior year's $13.375 billion. Net charge-offs, meanwhile, grew to $9.557 billion from $8.701 billion a year ago. In the prior year quarter, the company had recorded total managed net losses of $11.684 billion, while there were no such item in the latest quarter.
As of June 30, the company's allowance for loan and lease losses was $45.255 billion, compared to $33.785 billion in the same period a year ago.
Commenting on the results, Chief Executive Officer and President Brian Moynihan said, "Our quarterly results show that we are making progress on our strategy to align around our three core customer groups - consumers, businesses, and institutional investors - and create the financial institution that customers tell us they want, built on a broad relationship of clarity, transparency, and helping them manage through challenging times. We improved our capital foundation through retained earnings, and credit quality improved even faster than expected."
Segment-wise, Deposits net income rose 25% year-over-year to $665 million, driven by increase in revenues, on FTE basis, to $3.604 billion from last year's $3.477 billion, and lower noninterest expense. The company attributed the growth in revenues to disciplined pricing, a customer shift to more liquid products, and a higher residual net interest income allocation.
In the Global Card Services segment, net income was $806 million, compared to prior year's net loss of $1.59 billion, reflecting sharp decline in provision for credit losses to $3.795 billion from $7.655 billion in 2009, on continued improvement in the U.S. economy. However, total revenue, net of interest expense, FTE basis, fell to $6.861 billion from $7.262 billion in the previous year, .driven by lower average loans and reduced interest and fee income.
Home Loans and Insurance segment recorded net loss of $1.534 billion, wider than prior year's loss of $726 million, hurt by 37% drop in FTE revenues to $2.795 billion from $4.463 billion a year ago. Provision for credit losses was $2.390 billion, down from $2.726 billion in 2009.
In the Global Commercial Banking, the company generated net income of $790 million, compared to a loss last year, reflecting provision for credit losses of $623 million that fell sharply from prior year's $2.081 billion. Meanwhile, FTE revenues declined to $2.778 billion from $2.843 billion a year earlier.
Global Banking and Markets' net income plunged to $927 million from $3.903 billion a year ago, reflecting fall in FTE revenues to $6.005 billion from $10.411 billion last year, due to the absence of prior year's $3.8 billion gain on the contribution of the merchant services business.
In the Global Wealth and Investment Management segment, second-quarter net income declined to $356 million from prior year's $396 million, while FTE revenues grew to $4.33 billion from $3.96 billion last year.
All Other businesses reported net income of $1.1 billion, up $346 million from a year ago on higher net revenue driven by a $1.2 billion pretax gain on the sale of shares of Itaú and credit-related gains primarily associated with the Merrill Lynch structured notes of $1.2 billion. These were partially offset by increases in the provision for credit losses and noninterest expense.
According to Dealogic second-quarter 2010 league tables, Bank of America Merrill Lynch, i.e., the global banking and global markets businesses of Bank of America, ranked No. 1 in U.S. net investment banking revenues with a 13% market share, the company said.
Among others in the financial sector, Citigroup reported that its second-quarter net income declined to $2.697 billion from $4.279 billion in the same quarter last year. Net income available to common shareholders was $2.697 billion, down from $3 billion in the prior year. On a per share basis, net income was $0.09, compared to $0.49 in the year ago quarter. Revenues for the quarter were $22.07 billion, compared to $29.97 billion in the prior year quarter.
JPMorgan's net profit for the second quarter grew 76% to $4.80 billion, on sharply lower provision for credit losses. On a per share basis, earnings increased 289% to $1.09. Meanwhile, the company posted a 2% decline in revenues to $25.10 billion, stating that consumer-lending businesses did not meet its expectations nor generate satisfactory returns on capital. On a managed basis, revenues fell 8% to $25.61 billion. The company's provision for credit losses was $3.36 billion, down 65% from the prior year.
Wells Fargo & Co. (WFC) is slated to release its second-quarter results on Wednesday, July 21, with analysts estimating earnings of $0.48 per share, on revenues of $21.38 billion.
For the first six months of fiscal 2010, Bank of America's net income fell to $6.305 billion from prior year's $7.471 billion, while net income applicable to common shareholders grew to $5.617 billion from $5.233 billion in the previous year. Earnings per share declined to $0.55 from $0.75 last year.
First-half total revenue, net of interest expense, declined to $61.122 billion from $68.532 billion a year ago, and FTE revenues fell to $61.740 billion from $69.166 billion last year.
BAC is currently trading at $14.63 in pre-market activity, down $0.764 or 4.94%, on a volume of 13 million shares. In the past 52 weeks, shares have traded between $11.93 and $19.86.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.