By Pritam Biswas, Saeed Azhar and Niket Nishant
(Reuters) -Bank of America topped estimates on Tuesday for first-quarter profit as interest income grew and volatile markets helped its stock traders rake in a record haul, lifting its shares more than 4%.
As markets whipsawed around U.S. President Donald Trump’s tariff policies, the second-largest U.S. lender brought in 9% higher trading revenue, mirroring trends seen at rivals.
"There is a lot to potentially change given the uncertainty around the tariffs and the policies on the future path of the economy," CEO Brian Moynihan told analysts on a call.
Equities trading jumped 17% to a record $2.2 billion, while fixed income, currencies and commodities trading revenue jumped 5% to $3.5 billion, propelling its markets revenue to the highest in more than a decade.
"These results were sustained by an economy growing at a moderate pace and the client concerns over trade policy and recent market turmoil," Chief Financial Officer Alastair Borthwick said.
"Still, our research team at this point does not believe we will see a recession and our clients continue to show encouraging signs. Employment is obviously healthy and consumers have proven resilient."
The lender has set aside reserves in case higher unemployment in the future strains borrowers, Borthwick said. The company’s loans are more balanced and its liquidity has improved significantly since the 2008 financial crisis, he said.
Rivals JPMorgan Chase (NYSE:JPM) and Goldman Sachs also reported stronger performance from their trading businesses.
At BofA, "trading results were the star of the show," said Stephen Biggar, banking analyst at Argus Research.
"Still, a collapse in M&A (mergers and acquisitions) and IPO (initial public offering) deal volume could doom a 2025 recovery if tariff turmoil is not resolved soon."
The bank recorded investment banking fees of $1.5 billion, down from $1.7 billion over the last quarter and down 3% on a year-on-year basis amid market uncertainty. But Borthwick said the deal pipeline was probably stronger than it was last quarter.
BofA’s earnings were $7.4 billion, or 90 cents per share, in the quarter ended March 31. That compares with $6.7 billion, or 76 cents per share, a year earlier.
Analysts were expecting a profit of 82 cents per share, according to estimates compiled by LSEG.
"The market likes the stronger revenues that were driven by net interest income and fees as the company witnessed broad-based balance sheet growth," said David Wagner, portfolio manager at Aptus Capital Advisors.
MAINTAINS NII FORECAST
The lender’s net interest income — the difference between what it earns on loans and pays on deposits — grew 3% to $14.4 billion, partially helped by lower deposit costs.
It maintained its earlier NII forecast, saying it would hit $15.5 billion to $15.7 billion by the fourth quarter. Interest-rate cuts last year had helped improve sentiment among borrowers, benefiting banks such as BofA, which had forecast record net interest income in 2025 before Trump unveiled the new tariffs.
Borthwick said the bank expected a full-year NII increase of 6% to 7%.
Bank of America’s stock has fallen 12.4% since broad tariffs were unveiled this month.
Fears sparked by the tariffs have alarmed investment bankers globally, prompting dealmakers who were once bullish on Trump’s policies to adopt a wait-and-watch approach.
In the first three months of 2025, U.S. M&A activity fell 13%, according to data from Dealogic.
Provisions for credit losses were $1.5 billion, higher than $1.3 billion from a year earlier.
BofA eliminated some investment banking roles last month, weeks after it let go of staff in its investment banking and global markets divisions globally as part of an annual performance review process.
The reductions, which included managing directors, directors, and vice presidents, accounted for 1% of the company’s workforce.
Bank of America’s headcount fell to 212,732 as of March 31, compared with 213,193 in the previous quarter.