Bank of America (BAC, $29.32) Soars 7% After Record Earnings Report

Bank of America’s Q4 2018 profit tripled to a record $7.3 billion, owing to strong performance from its consumer-banking business and the lower corporate tax rate. On the back of this better-than-expected performance, shares of the company rose by +7.16% on Wednesday of last week. Another confidence booster for the investor community was the bank's announcement to buy back shares (common stock) worth $26 billion.

The company's net interest income for the fourth quarter, a widely followed measure of profitability for banks, touched 2.48% versus analyst expectations of 2.45%.

This is not the only quarter the bank performed better than expected. In Q3, the banks earnings per share stood at 73 cents compared to analysts' estimate of 63 cents, whereas the $22.7 billion revenue generated during the third-quarter surpassed the expected $22.397.

According to CEO Brian Moynihan, operating leverage based on disciplined expense management, solid asset quality, and loan and deposit growth drove this quarter's results.

Profits in consumer banking business grew by 52% on a y-o-y basis to $3.3 billion, whereas the loan book increased by about 1.9%. Credit and debit card spending also expanded by 6%.

However, like most banks BAC faltered in the fixed-income trading business, where revenue fell by 15% to $1.45 billion compared to analysts estimates of $1.62 billion. This decline, however, was nicely offset by an 11% rise in equities trading revenue to $1.1 billion. Overall, sales and trading revenue grew by 1% on a y-o-y basis to $2.6 billion.

Other banks topping expectations this week include Goldman Sachs (GS), Wells Fargo (WFC) and Citigroup (C).