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BofA Easily Beats Views On Reserves, Investment Banking

Bank of America (BAC) reported stronger-than-expected earnings early Thursday, as banking stocks continue to reap the benefits of a recovering economy, growing investment activity and narrowing credit loss exposure. Citigroup (C) is set to report first-quarter results before the open. BAC stock and Citigroup rose early.




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Bank of America Earnings

Estimates: Analysts polled by Zacks Investment Research expected Bank of America earnings per share of 65 cents, a 63% gain from the year-ago quarter, on revenue of $21.91 billion.

Results: Bank of America earnings jumped 115% to 86 cents a share with revenue at $22.9 billion. A reserve release of $2.7 billion helped boost BofA earnings. Investment banking and underwriting fees hit a record, while fixged-income trading revenue swelled 22%.

Stock: Shares rose 1.2% to 40.35 in premarket trading on the stock market today. BAC stock is extended from a 34.47 buy point from a cup-with-handle base, according to MarketSmith chart analysis.

Bank of America’s relative strength line is trending upward, as banking stocks enjoy a rotation into value stocks. Its RS Rating is 76, slightly below the 80 that IBD recommends when evaluating stocks. Meanwhile, its EPS Rating is just 59, as the company’s profits have suffered during the pandemic.


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Citigroup Earnings

Estimates: Citigroup earnings per share is seen soaring 142% to $2.56, while revenue was expected to fall 9% to $18.91 billion.

Results: Check back later.

Stock: Shares rose about 1% early Thursday. Citigroup stock closed in buy range from a cup base with a buy point of 69.52. It has a follow-on entry point at 76.23 from a four-weeks-tight pattern. At the end of this week, that tight pattern will be a flat base with a buy point of 76.23.

Citigroup’s relative strength line has leveled off after declining over the last month. Its RS Rating is 71, while its EPS Rating is 54.

Wells Fargo (WFC), JPMorgan Chase (JPM) and Goldman Sachs (GS) on Wednesday reported earnings that beat views.

JPMorgan and Goldman got a lift from strong trading and investment banking revenue amid stock market volatility and a surge in new listings.

Morgan Stanley (MS) reports earnings Friday.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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