Have you been eager to see how Bank of America Corporation BAC performed in Q3 in comparison with the market expectations? Let’s quickly scan through the key facts from this Charlotte-based one of the world's largest financial institutions’ earnings release this morning:
An Earnings Beat
BofA came out with earnings of 37 cents per share, outpacing the Zacks Consensus Estimate was 34 cents. Further, this was significantly up from net loss of 4 cents recorded in the prior-year quarter.
Lower expenses were the key reason for the earnings beat.
How Was the Estimate Revision Trend?
You should note that the earnings estimate revisions for BofA depicted a bearish stance prior to the earnings release. The Zacks Consensus Estimate fell 2.9% to 34 cents over the last 7 days.
However, BofA has a decent earnings surprise history. Before posting the earnings beat in Q3, the company delivered positive surprises in three quarters of the prior four quarters. Overall, the company has a positive earnings surprise of 27.56% in the trailing four quarters.
In-Line Revenues
BofA posted net revenues of $20.7 billion at par with the Zacks Consensus Estimate. However, it compared unfavorably with the year-ago number of $21.4 billion.
Key Statistics
- Non-interest expense (including legal expense of $231 million) fell to $13.8 billion
- Investment Banking Fees were $1.3 billion
- Fixed Income, Currencies and Commodities sales and trading revenue fell 11%
- Originated $17 billion in residential mortgage loans and home equity loans.
- Returned $3.1 billion to shareholders through repurchases and dividends (year-to-date).
Chief Executive Officer Brian Moynihan, said, “The key drivers of our business — deposit taking and lending to both our consumer and corporate clients — moved in the right direction this quarter and our trading results on behalf of clients remained fairly stable in challenging capital markets conditions.”
What Zacks Rank Says
The estimate revisions that we discussed earlier have driven a Zacks Rank #3 (Hold) for BofA. However, since the latest earnings performance is yet to be reflected in the estimate revisions, the rank is subject to change. While things apparently look favorable, it all depends on what sense the just-released report makes to the analysts.
How the Market Reacted So Far
Following the earnings release, BofA shares were up nearly 1.5% in the pre-trading session. Clearly, the initial reaction shows that the investors have considered the results in their favor. However, the full-session’s price movement may indicate a different picture.
Check back later for our full write up on this BofA earnings report!
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