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Bank of America shares rebound on Wednesday, quarterly earnings beat as loan growth in consumer banking offsets weakness in trading, advisory services

Bank of America Corp’s (BAC) second-quarter profit, reported on Wednesday, topped Wall Street estimates, as a healthy domestic economy supported loan growth in consumer banking.

Bank of America shares closed higher for the fifth time in the past eleven trading sessions in New York on Wednesday. The stock went up 0.69% ($0.20) to $29.19, after touching an intraday high at $29.62, or a price level not seen since July 1st ($29.85).

Shares of Bank of America Corporation have risen 18.47% so far in 2019 compared with a 19.05% gain for the benchmark index, S&P 500 (SPX).

In 2018, Bank of America’s stock went down 16.53%, thus, it again underperformed the S&P 500, which registered a 6.24% loss.

The banks revenue, net of interest expense, went up 2% year-on-year to $23.08 billion during the quarter ended on June 30th. In comparison, analysts on average had anticipated revenue of $23.2 billion.

Net income at Bank of America’s Consumer Banking segment rose to $3.29 billion during the second quarter from $2.92 billion in the same period a year earlier. Total loans in the consumer banking division registered a 6% annual growth, while deposit base grew 3%.

“We see solid consumer activity across the board, with spending by Bank of America consumers up 5% this quarter over the second quarter of last year,” Brian Moynihan, Bank of Americas Chief Executive Officer, said in a statement, cited by Reuters.

Net income at Bank of America’s Global Wealth and Investment Management division increased to $1.07 billion during the past quarter from $971 million in Q2 of 2018.

On the other hand, net income at the banks Global Markets segment, which includes bond and equity trading, shrank to $1.07 billion during the latest quarter from $1.27 billion a year earlier.

Investment Banking fees were reported at a total of $0.6 billion in Q2, down from $0.7 billion in the year-ago quarter.

Meanwhile, net income attributable to shareholders was reported to have risen to $7.11 billion ($0.74 per share) during the quarter ended on June 30th from $6.47 billion ($0.63 per share) in the year-ago period.

The banks earnings per share, which exclude special items, were reported at $0.75 during the second quarter. In comparison, analysts on average had expected adjusted earnings of $0.71 per share.

Analyst stock price forecast and recommendation

According to CNN Money, the 27 analysts, offering 12-month forecasts regarding Bank of America Corp’s stock price, have a median target of $32.00, with a high estimate of $43.00 and a low estimate of $28.00. The median estimate represents a 9.63% upside compared to the closing price of $29.19 on July 17th.

The same media also reported that at least 14 out of 29 surveyed investment analysts had rated Bank of America Corp’s stock as “Buy”, while 13 – as “Hold”.

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