Bank of America joined Wall Street rivals whose trading businesses grew in the past three months as investors sought to shield their wealth from the fallout of President Trump’s aggressive tariffs on U.S. allies and competitors.
Fees from stock- and bond-trading climbed 7 percent in the second quarter to $3.6 billion, the Charlotte, N.C.-based lender said in a statement on Monday. Like rival JPMorgan Chase, Bank of America posted the largest gains in its equity unit, where revenue climbed 17 percent as protectionist White House policies pulled U.S. markets down from record highs at the start of the year.
“When markets move,” investors often transfer money to capture gains or avoid losses, Chief Financial Officer Paul Donofrio told reporters. “I wouldn’t be rooting for a trade war, but when there is volatility, if we do our job well, we’re going to be there for customers and clients to help them address any issues they may have.”
For both Wall Street firms and their customers, second-quarter results so far indicate the worst of the fallout is yet to come from Trump’s double-digit metals tariffs, 25 percent levies imposed on $34 billion of Chinese imports and threatened on $416 billion more and possible double-digit duties on automobiles. It might still be averted if White House policies lead to the economically beneficial international deals Trump has promised.
The trade rhetoric “certainly introduced volatility, but we haven’t yet really started to see any significant changes in behavior,” Citi Chief Executive Officer Michael Corbat told his company’s investors on an earnings call Friday. “The markets have fears of what that rhetoric leads to, but at this point, we’re not seeing it coming through the numbers.”
Indeed, stock-underwriting fees gained 49 percent to $570 million at JPMorgan, 8 percent to $335 million at Citi and 3.9 percent to $107 million at Bank of America. Both JPMorgan and Citi posted double-digit gains in merger-advisory revenue.
“We’re watching Canada, Mexico and China, and there hasn’t been a lot of impact yet from the European Union discussions,” ” Bank of America’s Donofrio said. “We’re here to serve our clients. If they want to do things in anticipation of what’s going on, we’re here to help them.”
Bank of America climbed 4.3 percent to $29.87 in New York trading on Monday. The shares have gained 5.6 percent so far this month.
Companywide, profit rose 33 percent to $6.8 billion, or 63 cents a share, higher than the 57-cent average estimate from analysts surveyed by FactSet. The lender also benefited from a $664 million increase in interest income as the Federal Reserve stepped up the pace of rate hikes and consumers continued switching to less-expensive digital transactions from branch visits.
About 76 percent of all deposits are now made through ATMs and mobile devices, Chief Executive Brian Moynihan noted on an earnings call. “This quarter, we saw more deposit transactions by a person taking a picture of a deposit and sending it via a mobile phone than we did by a person handing a check to the teller,” he noted.
That buoyed profitability in consumer banking, the lender’s largest business, where revenue grew 8.3 percent to $9.2 billion.
“Operating a strong retail banking franchise is crucial to global financial institutions’ revenue growth,” said Axel Pierron, managing director of capital markets management consultancy Opimas. “Both JPMorgan and Bank of America have benefited from this diversified source of revenue as consumer banking has been a major driver of growth this quarter, supported by capital markets revenue.”
