Moynihan: We're not just a rates play

|By:, SA News Editor

A $700M increase in net interest income certainly helped Bank of America's (NYSE:BAC) Q1, but CEO Brian Moynihan reminds that 60% of the bank's revenue growth last quarter was from non-interest sources (like trading).

Investors, however, tend to pay less for trading revenues which can be rather lumpy.

Turning to expenses, the bank - for now - is sticking with its promise to cut another $5B in annual expenses by 2018. Trouble is, with business growing, one would expect expenses to have to go up at least somewhat. Sure enough, noninterest expenses in Q1 of $14.848B were up a hair from a year earlier.

CFO Paul Donofrio reminds that the expense promise was based on the economic environment at that time. "If things get better, we'd have to adjust."

The good news on earnings overall and trading in particular has seemingly been priced in thanks to the results from JPMorgan and Citigroup last week, not to mention a 40% advance in BofA over the last six months. After an early pop, shares are lower by 0.5% at current writing.

WSJ blog

Earnings call slides

Previously: Surge in trading revenue boosts BofA's quarter (April 18)