Bank of America shares fall in earnings. What to know.

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Bank of America

posted strong results in the first quarter on Thursday, but the stock fell, while investors focused on the bank’s Covid-19 spending and net interest income and weaker-than-expected loan growth.

Earnings at Bank of America (scoreboard: BAC) doubled from a year ago to $ 8.1 billion, up from $ 4 billion in the first quarter of last year. The bank posted earnings of 86 cents a share on sales of $ 22.8 billion – exceeding analysts’ expectations for earnings of 66 cents a share, with revenues of $ 21.9 billion.

Shares fell 4% in recent transactions to $ 38.28, after advancing to 1.2% premarket.

S&P 500

increased by 0.7%.

That

JPMorgan Chase

(JPM) and

Fargo fountains

(WFC), which reported earlier this week, Bank of America’s results were helped by the improved economic environment and the release of reserves accumulated last year to cover potential loan losses. The bank released $ 2.7 billion from its reserves, up from adding $ 3.6 billion at this time last year.

But although the economic context is much better than feared, customers still do not lend. Bank of America saw a decline in revenue from its consumer bank by $ 1.1 billion to $ 8.1 billion due to the impact of lower rates and credit balances.

Net interest income was $ 10.2 billion, down from $ 12.1 billion last quarter as the bank – like its colleagues – continues to be affected by low interest rates, which narrows the difference between what banks earn from loans and pay in deposits.

“While low interest rates have continued to drive revenue, credit costs have improved and we believe that progress in the health crisis and the economy indicates an accelerated recovery,” CEO Brian Moynihan said in a statement.

Weaker net interest income was offset by a 19% increase in non-interest income, which rose to $ 12.6 billion due to strong capital markets and investment banking. Bank of America noted record $ 2.2 billion in bank investment fees and $ 900 million in equity subscription fees, which rose 218%. Meanwhile, fixed income trading rose 22% to $ 3.3 billion, while stock trading rose 10% to $ 1.8 billion.

The bank also saw interest-free spending rise 15% to $ 15.5 billion due to Covid-19 growth and compensation costs.

City Group

(C) also reported the results on Thursday, while

Morgan Stanley (MS)

reports Friday. JPMorgan Chase,

Goldman Sachs

Group (GS) and Wells Fargo launched their bank gains on Wednesday.

Write Carleton English to [email protected]