Market Overview

Analyst Gives Bank Of America's 'Low-Quality' Beat More Scrutiny


Bank of America Corp (NYSE: BAC) reported its second-quarter results, which came in ahead of expectations but according to one analyst should be viewed as a "low quality" beat.

UBS analyst Saul Martinez maintains a Neutral rating on Bank of America's stock with an unchanged $26 price target after the earnings report was "messy" with positive and negative non-core items mostly "washing" each other out.

Net Interest Income A Brief Concern

Bank of America's net interest income (NII) fell 0.3 percent sequentially to $11.2 billion, but was up 8.5 percent year-over-year, Martinez said. It also fell short of the $11.3 billion expected as higher short-term rates were offset by funding costs within the Global Equities division.

However, Bank of America "somewhat encouragingly" did say it expects growth in NII in the third quarter despite a $130 million headwind related to the sale of its UK cards business.

Now What?

Given the less-than-expected NII in the quarter, it appears the bank's results were "mixed" as earnings within most business segments were merely in-line with expectations.

Looking forward, management guided to a 4 percent reduction in 2018 expenses to $53 billion. Any potential reductions below this figure after 2018 should be "positively received," especially when factoring in continued NII headwinds from low rates.

Related Links:

After Q2 EPS Beat, Is Bank Of America Underappreciated?

Where Will The Money Rotate In Q3?

Latest Ratings for BAC

Jan 2021CitigroupUpgradesNeutralBuy
Nov 2020Morgan StanleyDowngradesOverweightUnderweight
Sep 2020Deutsche BankUpgradesHoldBuy

View More Analyst Ratings for BAC
View the Latest Analyst Ratings


Related Articles (BAC)

View Comments and Join the Discussion!

Posted-In: bank earnings Saul Martinez UBSAnalyst Color Analyst Ratings

Latest Ratings

MRTXHC Wainwright & Co.Maintains257.0
NVDATruist SecuritiesMaintains672.0
BLKBMO CapitalMaintains715.0
BLKDeutsche BankMaintains838.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at