Bank of America second-quarter earnings drop 32%, missing expectations as market sell-off takes a toll

• Bank of America's Q2 earnings came in lower than expected Monday, down 32% on the year, as the market sell-off took a toll.
• BofA's global banking arm saw its profit fall sharply as activity slowed due to the high uncertainty in markets.

Bank of America's second-quarter earnings narrowly missed expectations on Monday, as a slump in stock markets led to a slowdown in activity in the lender's investment banking arm.

Profit at the Wall Street lender came in at $6.2 billion for the three months to June 30. That was down more than 32% from $9.2 billion in the same quarter a year earlier, when markets were riding high on a wave of stimulus.

The fall in profit took BofA's earnings per share down to $0.73. That was below the $0.75 expected by analysts polled by Bloomberg, and down from $1.03 in the same quarter a year earlier.

The coronavirus pandemic initially battered lenders in 2020, but huge amounts of government and central bank stimulus quickly caused financial markets to rebound and banking activity to recover.

However, a sharp drop in financial markets in 2022 has led to a slowdown in activity in capital markets, with the number of initially public offerings — from which investment banks reap large fees — falling sharply.

The S&P 500 has fallen almost 19% in 2022 so far and more than 12% in the last three months, as concerns about an economic slowdown spurred by the Federal Reserve's aggressive interest rate increases have gripped stock traders.

The bank said the Fed's rate hikes had boosted revenues in the consumer banking arm. But Chief Financial Officer Alastair Borthwick noted that BofA was dealing with "changing and challenging markets."

Here are the key figures:

• Earnings per share of $0.73, vs. $0.75 estimated by analysts polled by Bloomberg.
• Revenue of $22.79 billion vs. $22.86 billion estimated.
• Net income of $6.2 billion, vs. $9.2 billion a year earlier.
• Global banking net income of $1.51 billion, vs. $2.43 billion a year earlier.

Shares in BofA were last trading down 0.96% at $31.94 in Monday's premarket session.

Banks have kicked off second-quarter earnings season with mixed results. Citigroup impressed investors by beating expectations on Friday, although profit still fell sharply compared with a year earlier.

JPMorgan and Morgan Stanley both missed analysts' forecasts last week, however, in a sign of the pressure the market sell-off is putting on investment banks.

On Monday, Goldman Sachs' earnings per share came in well above expectations on the back of a strong quarter by the bank's fixed income traders.