Bank of America Corp. (NYSE: BAC) released its earnings. The first-quarter profit fell 13% due to a big drop in trading revenue and the drag of low interest rates. The stock price dropped 1% in premarket trading after rising nearly 4% on Wednesday.
The bank announced a profit of $2.68 billion, or 21 cents a share, compared with the 20 cents a share expected by analysts polled by Thomson Reuters. Compared to last year’s earning $3.1 billion, or 25 cents a share, the revenue fell down and it’s mainly due to trading slump and low interest rates.
“In quarters like this, revenue is going to be challenged,” said Bank of America Chief Financial Officer Paul Donofrio on a conference call where he referenced low rates and volatile markets.
Compared with a rise of about 37% in shares of J.P. Morgan Chase in the last five years, Bank of America shares are relatively flat.
As for Wells Fargo & Co (NYSE: WFC), its first-quarter profit fell 7% as the nation’s third-largest bank by bad loans dealing with the significant stress in its energy portfolio. Nearly 2% of its loans are to the energy sector. Shares of Wells Fargo dropped nearly 1.5% in the premarket trading Thursday.
“The increases in losses and nonperforming loans in the first quarter were primarily due to continued challenges in the oil and gas portfolio,” Chief Risk Officer Mike Loughlin said in a statement.
Oil prices have dropped by two-thirds since 2014, jeopardizing the global energy markets and driving a string of bankruptcies as oil-drilling companies default on their loans.