Bank of America (BAC) and Citigroup (C) reported first quarter increases in profits and revenue driven by robust trading results, becoming the latest big banks to benefit from the market volatility triggered by the start of President Trump’s tariff rollout in February and March.
Bank of America CEO Brian Moynihan acknowledged in a statement Tuesday that “we potentially face a changing economy in the future” — a nod to the uncertainties ahead as some of Trump’s more aggressive tariffs are still in question — but he also told analysts the bank’s research team doesn’t see a recession happening in 2025.
US consumers, according to the bank’s data, keep “pushing money into the economy” and the lender’s business clients “remain profitable, liquid and have strong results.”
“We continue to watch for signs the environment [is] actually changing,” Moynihan added.
Citigroup CEO Jane Fraser also nodded to Trump’s trade war in her Tuesday earnings statement, noting that “when all is said and done, and longstanding trade imbalances and other structural shifts are behind us, the U.S. will still be the world’s leading economy, and the dollar will remain the reserve currency.”
At Bank of America, total sales and trading revenue for the country’s second-largest bank rose 9% from the year-ago period to $5.66 billion, its highest quarterly haul in more than a decade. Bank of America’s revenue just from trading equities was up 17% to $2.2 billion, its highest ever for one quarter.
Citigroup’s sales and trading revenue rose 12% from the year-ago period to $6 billion, with Citi also notching its highest quarter ever for equity trading.
JPMorgan Chase (JPM), Goldman Sachs (GS), and Morgan Stanley (MS) also reported jumps in trading amid market volatility during the first quarter. Together, the big five banks on Wall Street pulled in nearly $37 billion on that front.
At the same time, some banks showed a slight pullback in investment banking, as companies became more cautious about new deals amid the uncertainties surrounding Trump’s trade policies. Those fees at Bank of America fell 3% from the year-ago period to $1.52 billion.
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However, Citigroup reported that its investment banking fees rose 13.6% from the year-ago period to $1.1 billion. Its total profits and revenue also rose from a year ago to $4 billion and $21.6 billion, exceeding analyst expectations.
Total profits for Bank of America were $7.4 billion. That figure was 11% higher than a year ago and exceeded what analysts expected.
The stocks of Bank of America and Citigroup both rose in Tuesday morning trading.
Bank of America CFO Alastair Borthwick told reporters, “Our research team at this point doesn’t believe we’ll see a recession, and our clients continue to show encouraging signs.”
“Our research team are still calling for modest growth,” he added. “They’ve talked about the fact that they think that some of the uncertainty may lead to a slowdown in the economy before it picks back up, but that would be very similar to things like the blue-chip consensus at this point, and similar to what Chairman Powell has said” — referring to Fed Chair Jerome Powell.
But there were signs that Bank of America expects credit conditions to worsen. It set aside $1.48 billion in credit provisions for potential future losses, more than 12% more than it set aside a year ago.
Borthwick walked analysts through a comparison of the bank’s balance sheet now as compared to the fourth quarter of 2009, a tumultuous period following a housing crash and financial crisis that severely tested Bank of America and the rest of the US banking system.
He told analysts that Bank of America’s capital base and liquidity have increased significantly since the end of 2009, and stress test results indicate significantly lower credit losses expected in a severe downturn.
The changes made since that time, Moynihan said, allow the bank to “stand tall in times of stress.”
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