This week, Bank of America posted its first-quarter earnings report and on first glance, it looks pretty solid. Yet the company’s shares fell 2.6 percent in the first few hours of trading.

Overall, the bank’s earnings actually exceeded investor expectations. The bank’s first-quarter profits rose six percent to $7.3 billion which is higher than anticipated.

Revenue remained unchanged from a year earlier at $23 billion which was about what investors expected. Consumer banking revenue increased and the average deposit size grew three percent.


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What to take from the earnings report

On the surface, Bank of America’s earnings report looks pretty positive. But the report revealed both positive and negative indicators for the company in 2019.

Bank of America continues to grow in key areas

The bank’s net interest yield grew by 2.51 percent over the past year. Net efficiency also went up by three percentage points. Bank of America also bought back $6.3 billion in stock and its loan and deposit portfolios grew as well.

And Bank of America continues to lead the industry in mobile technology. The bank’s digital sales made up a quarter of their consumer banking sales and mobile usage grew by nine percent in the past year.

Most recently, Bank of America announced it was increasing the minimum wage for its employees to $20 per hour. This is the highest minimum wage offered by any large bank in the U.S.   

There is still room for improvement

Earnings reports usually reveal some problem areas and Bank of America is no exception. For one thing, the net charge-off ratio increased by three percentage points. This could indicate that the bank is anticipating an economic slowdown.

And Bank of America has most of its banking operations concentrated in the United States. So it would be more heavily affected by an economic downturn in the U.S.

And the company’s equity trading revenue went down 22 percent from a year earlier. Fixed income revenue also fell by eight percent.

Final thoughts

Overall, the earnings report showed solid improvement for Bank of America. In spite of this week’s drop in shares, the bank’s shares have grown by more than 20 percent over the past year. CEO Brian Moynihan said the bank is focused on cutting costs and looking for new revenue opportunities in the future.