The big banks have been raking in billions of dollars each quarter from net interest income.
And despite the market's anticipation of rate cuts from the Federal Reserve this year, they expect this to continue for the foreseeable future.
Here's what the CFO of Bank of America, Alastair Borthwick, had to say about it:
"Net interest income is affected by a variety of factors, including rates, the shape of the yield curve, and deposit activity. Currently, if we were to receive one 25 basis point cut per quarter, as the forwards indicate, NII would grow through the rest of 2025 to around $15.5 billion to $15.7 billion by Q4 of this year."
It's a fantastic time to be a bank...
Let's talk about what else happened with their reports.
Here are the latest earnings reports from the S&P 500 👇
*Click the image to enlarge it
Bank of America had the best earnings reaction and reported a double beat with a muted reaction score of 2.21.
The company reported revenues of $27.37B, versus the $26.98B estimate, and earnings per share of $0.90, versus the $0.82 estimate.
Johnson & Johnson had the worst earnings reaction and reported a double beat with a reaction score of -0.21.
The company reported revenues of $2.31B, versus the $2.34B estimate, and earnings per share of $3.32, versus the $3.40 estimate.
Now let's dive into the data and talk about what happened with these reports 👇
BAC has been rewarded for 12 of its last 15 earnings reports:
Bank of America rallied 3.6% after this earnings report, and here's why:
Net interest income increased by 3% year-over-year to $14.4B
The management team issued better-than-expected forward guidance for net interest income
Deposits reached nearly $2T, growing for the 7th consecutive quarter
The business is doing great!
But the stock is not...
The price is in a range between the 61.8% and 38.2% retracements of the prior drawdown. We see no reason for this to change...
We expect C to continue churning sideways between 34.50 and 40.50 for the foreseeable future.
C is back in the penalty box:
Citigroup rallied 1.8% after this earnings report, and here's why:
Advisory fees increased impressively by 84% year-over-year
Net interest income grew to $14B, a 4% Y/Y increase
Operating expenses decreased by 5% Y/Y as they continue to streamline operations through AI tools
Business is good for these folks...
However, the market has recently significantly punished the stock.
In February, price recently tried to break out above a shelf of former highs, but quickly failed. We think repairing this damage will take at least a few quarters.
If C is below 83, the path of least resistance is sideways.
Thank you for reading.
- The Beat Report Team
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