(Reuters) – Bank of America Corp reported a higher-than-expected quarterly gain on its consumer bank and cut costs that began to pay off after years of closure of branches, staff reductions and efforts to Reduce the role of technology and related costs.
Chief Executive Brian Moynihan spoke enthusiastically about a broad recovery in consumer activity that began in 2009, calling his quarterly profit of $ 2 billion to the analysts call on Tuesday.
In the midst of the great recession, the unit had 6,000 financial centers, 100,000 employees, two-thirds of the bank deposits and few digital capabilities.
Regulatory changes introduced after the financial crisis of 2008 began quickly to reduce revenues, as strategic decisions, such as the reduction of activities generated by third parties.
The company has recently benefited from cost reduction as well as improved technology, deposit growth and focus on higher-quality borrowers, Moynihan said.
In the second quarter, the division was able to increase deposits at lower costs and use these cheaper funds to stimulate loan growth, which helps to outperform any other unit.
Overall, the Bank of America reached a goal of spending more than 60 cents for every dollar of income it produces, down from 63 cents a year earlier. Investors have seen this measure closely as a sign of bank efficiency.
Bank of America, the second largest asset lender, is working to reduce annual operating expenses by 53 per billion next year.
The consumer bank helped Bank of America to make a net profit of $ 4.9 billion, or 46 cents per share, up 11 percent from the same period last year.
Analysts were expecting 43 cents on average, according to Thomson Reuters I / B / E / S.
The bank’s total turnover to 23070000000 also exceeded the analysts’ average estimate of 21.78 billion.
“It was a good quarter for Bank of America,” said Evercore ISI analyst Glenn Schorr.
“You really have to try to find some problems to deal with.”
Moynihan and chief financial officer Paul Donofrio both second quarter qualified one of the best in bank history.
However, its stock has declined 1.1 percent to $ 23.75 at noon, after a rise of 8.4 percent since the beginning of the year.
While large banks have reported better results, investors were disappointed that profits are not increasing faster.
Last week, shares of JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc fell after beating analysts’ estimates, such as Goldman Sachs Group Inc. on Tuesday.
Profits and gains from the Bank of the United States were overshadowed by the margin of intermediation below expectations, according to analysts.
This measure, up 8.6% to $ 10.99 billion in the second quarter, measures the difference between the cost of bank financing and the income generated from these funds.
Bank of America is considered the most sensitive to interest rates among major US banks because of the way its balance is built in terms of term loans, types of financing and hedges.
In addition to its global markets unit, which suffered a slowing of trade just like other Wall Street banks, another Bank of United States companies also generates greater profits.