Bank of America Q2 profit jumps 27% on trading, IB surge

Bank of America generated net income of $9.1 billion in the second quarter, up 27% from a year earlier, as revenue climbed 15% to $31.6 billion. Earnings per share rose 34% to $1.21, demonstrating strength across its entire business portfolio rather than relying on a single driver.

The standout performance came from a resurgence in capital markets activity, a positive signal for investors monitoring the pace of Wall Street dealmaking. Investment banking fees surged 50% year-over-year to exceed $2.1 billion, while sales and trading revenue jumped 33% to $7.2 billion. Non-interest income as a whole grew 22%, aided by an 18% rise in investment brokerage fees.

Net interest income on a fully taxable-equivalent basis reached $16.2 billion, a 9% increase. CEO Brian Moynihan attributed the gain to core lending strength, Global Markets lending, the repricing of lower-yielding assets, and the repayment of higher-cost funding. On the balance sheet, average deposits rose for a 12th consecutive quarter, while average loans grew 8% year over year.

"Every business segment contributed to our year-over-year growth," Moynihan said. He noted that each unit not only grew revenue and net income but also generated operating leverage and improved its efficiency ratio. Overall, the bank achieved 6.6% operating leverage in the quarter, tightened its efficiency ratio to 59%, and posted a 17% return on tangible common equity.

Buoyed by the quarterly results, management lifted its full-year guidance. The bank now projects 300 to 400 basis points of operating leverage and expects net interest income growth to land at the upper end of its previous 6% to 8% target range. Credit quality remained stable during the period, with provisions and charge-offs holding roughly steady and consumer card trends showing improvement.