Bank of America Outshines Projections: Q1 16% Earnings Beat Fuels Share Price Rally

Bank of America BAC outperforms expectations for the first quarter financial results, delivering a 16% positive surprise in earnings per share ($0.94 vs. $0.80 anticipated) and a 5% positive surprise in revenues ($26.39 billion vs. $25.19 billion).

What you should know about Bank of America's Q1 results: 

• Net income rose 15% from $7.1 billion in Q1 2022 to $8.2 billion in Q1 2023.
• Revenue, net of interest expense, rose 13% to $26.3 billion from a year ago. This was Bank of America's second-best quarter ever, in terms of revenue.
• Profits were largely driven by rising net interest income (NII), which increased by $2.9 billion, or 25%, from Q1 2022 to Q1 2023, to $14.4 billion, due to higher interest rates and robust loan growth. 
• From a year ago, the average loan and lease balances went up by $64 billion, or 7%, to $1 trillion. This was due to strong growth in business loans and higher credit card balances.
• End-of-period deposit balances eased $20 billion, or 1%, to $1.9 trillion compared to Q4 2022.
• For the consumer banking business, average deposits eased by $30 billion, or 3%, from $1.056 trillion in Q1 2022 to $1.026 trillion in Q1 2023. 
• In comparison to Q4 2022 and Q1 2022, EPS climbed by 10.5% and 17.5%, respectively, while sales growth was 7.5% and 13.6%, respectively.
• “Every business segment performed well as we grew client relationships and accounts organically and at a strong pace. Our results demonstrate how our company’s decade-long commitment to responsible growth helped to provide stability in changing economic environments,” said chair and CEO Brian Moynihan. 
• Shares of Bank of America were 2% higher in pre-market trading on Tuesday.

Bank of America vs Peers in Q1:

Bank of America announced better-than-expected results in the first quarter of 2023, with an EPS of $0.94, above analyst expectations by 16%.

On the same day, Goldman Sachs GS posted EPS of $8.79, 8% better than the $8.14 predicted by Wall Street, but missed revenues expectations by 4%. 

JP Morgan Chase & Co. JPM announced an EPS of $4.10, which was above analysts' expectations by 20%.

Citigroup, Inc. C announced an EPS of $2.19, 33% better than the median analyst projection.

Wells Fargo & Company WFC announced an EPS of 1.23, which topped expectations by 8%.

Stock Reactions:

Since the beginning of the earnings season for banks, Bank of America shares have outperformed rivals, rising by 8.5%, while JPMorgan shares rose by 8.2%.

Wells Fargo and Citigroup both increased by 4.85% and 4.2%, respectively. Morgan Stanley gained 3.3%, while Goldman Sachs lost 1.5%, underperforming its rivals.

Now Read: Buckle Up, Tesla Investors: Analyst Spots 2 Red Flags Ahead of Q1 Report

Banks stock performance as of April 18, 2023 (08:24 EDT) – Chart: Tradingview

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