EPS 94c. The bank noted that revenue from FICC trading (fixed income, currencies, and commodities) increased unexpectedly by almost 30%, to $3.43 Billion, as clients responded to changes in interest rates. This helped the bank exceed analysts' expectations for earnings per share.
The estimate was $1.18 billion. Reserve builds had a negative impact on the 1Q22 results. Provisions in the consumer unit, however, were higher than expected. Net charge-offs rose modestly to $807m, compared with $392m y/y & $689m q/q. This is slightly above the estimated $782.6m. In 4Q22 the rate was 1.71%, while in 4Q19 it was 3.03%. BofA’s allowance for loss on loans and leases was $12.5B, or 1.20% of the total amount of loans and leases. The $14.0B total allowance included $1.4B in unfunded commitments and a $243MM reduction on January 1, 2023 for the accounting change that removed the guidance for measuring and recognizing troubled debt restructurings. BofA’s Net Interest income rose by a staggering $2.9BN, or 25% year-over-year to $14.4B. This translated to a net yield of 2.2% as opposed to 1.69% (in line with estimates of 2.21%). The increase was primarily due to higher interest rates and increased loan growth. "The benefit of higher interest rates has been more than offset by the lower deposit balances and two fewer days for interest accrual, as well as a lower NII relating to GM activities."
BofA's compensation costs rose by 4.6% y/y, to $9.92billion, which was just a little bit above the estimated $9.82billion. Total non-interest costs rose 6% from $15.3 billion to $16.24 bn, a higher figure than estimated at $15.97 bn. BofA's presentation covered this important topic in detail, as regional banks are still being swept along in a slow-motion run of deposits. After the collapse of 3 smaller companies, customers flooded into the largest US bank. Deposits were lower than analysts had expected. Then, he showed a slide that we haven't seen in more than a century, the JPM London Whale, which confirmed what QE is. BofA illustrates the size of the excess deposits gap in the following slide. Remember that excess deposits are always and only an by-product of QE. (As banks flood themselves with deposits and do not have the matching and compensating increase in loans; instead, it is fed who injects them). Please don't withdraw your deposits as we are not SVB. BofA results provide a new look at the performance of Wall Street's most iconic banks during a turbulent quarter which saw three regional lenders fail. Below is the bank's Investor Presentation for Q1 (pdf link).