Bank of America misses Q2 revenue forecasts - but smashes income estimates after slashing credit-loss provisions

• Bank of America reported second-quarter earnings on Wednesday.
• The banking group's revenue fell short of Wall Street's forecasts, but it beat on net income.
• Bank of America counts Warren Buffett's Berkshire Hathaway as its biggest shareholder.

Bank of America reported second-quarter earnings on Wednesday. The banking group's revenue fell short of Wall Street's forecasts, but its net income blew past analysts' estimates.

Here are the key numbers:

• Revenue: $21.5 billion versus Bloomberg consensus estimates of $21.8 billion
• Net income: $9.2 billion versus consensus estimates of $6.6 billion
• Diluted EPS: $1.03 versus consensus estimates of $1.03

Bank of America, which counts Warren Buffett's Berkshire Hathaway as its largest shareholder with a 12% stake, posted a 4% decline in revenue last quarter as net interest income fell 6% and non-interest income fell 2%. However, the banking group's net income surged by around 160%, largely because it slashed its credit-loss provisions by $1.6 billion after boosting it by $5.1 billion in the second quarter of 2020.

"We delivered solid earnings and returned more capital to shareholders during the quarter as we moved to a more open economy," CEO Brian Moynihan said in the earnings release. "Consumer spending has significantly surpassed pre-pandemic levels, deposit growth is strong, and loan levels have begun to grow."

Bank of America's key consumer-banking segment posted a 4% increase in revenue and a sharp increase in net income last quarter. Deposits grew 21% to a record $979 billion, and consumer investment assets jumped 40% to a record $346 billion as the market rose and client flows remained strong. Credit and debit card spending also rose 16% from the preceding quarter.

The banking group's global wealth and investment management division delivered 14% revenue growth and a 59% increase in net income, thanks to record asset-management fees and lower credit costs. Its client balances also surged 25% to a record $3.7 trillion.

Revenue was flat in the bank's global banking business, but net income surged due to a reduced provision for credit losses. Investment-banking fees remained near record levels at $2.1 billion.

Bank of America's global markets business was the weak link last quarter, posting a 12% decline in revenue due to poorer sales-and-trading performance. Net income also dropped by more than half to $908 million, partly due to higher non-interest expenses.

Buffett, who famously invested $5 billion in Bank of America during the debt crisis of 2011, appears to prefer the lender to its peers. He's exited Goldman Sachs, JPMorgan, and other leading banks over the past year, and has virtually eliminated his stake in Wells Fargo, previously one of Berkshire Hathaway's biggest holdings.

In contrast, the investor and Berkshire CEO plowed $2.1 billion into Bank of America in the space of 12 trading days last summer. Berkshire owned more than 1 billion of the bank's shares at the last count - a stake worth about $40 billion, and the second-biggest holding in its stock portfolio after Apple.

The bank's shares were last down 2.1% in pre-market trading at $39.01. They're up almost 32% in the year to date, compared with a 16.3% gain in the S&P 500.