Bank of America shares rise after earnings top expectations on cost-cutting, lower taxes

The second-biggest U.S. lender said that second-quarter profit surged 33 percent to $6.8 billion, exceeding the $5.92 billion estimate of analysts surveyed by FactSet. Executives said it was the 14th straight quarter the firm posted positive operating leverage, or increased profit by turning levers including costs.

Bank said it managed to boost revenue while cutting expenses more than analysts had expected. The lender trimmed costs by 5 percent to $13.3 billion, beating the $13.5 billion forecast of analysts surveyed by Thomson Reuters. Meanwhile, revenue rose 3 percent to $22.6 billion, compared to the $22.3 billion estimate, excluding a year ago-gain tied to a business sale. The company's earnings per share surged 43 percent to 63 cents per share, crushing the 57 cent per share estimate.

Still, of all the figures on the bank's income statement for the quarter, the most stark change was a 43 percent drop in the bank's income taxes to $1.7 billion from $3 billion. That looked to be the single biggest factor in the bank's profit increase in the quarter. The administration's tax cut, which took effect this year, also allowed the firm to announce a new $500 million technology investment, Bank of America said.

Source: CNBC

Read more:

• USA ADP Nonfarm Employment Change: 202K vs 160K
• Iran response was ‘too fast and too furious’ on the U.S. airstrike
• USA – ISM Non-manufacturing PMI: 55.0 vs 54.5
• Top 5 things to watch on Tuesday
• Noise: How to Overcome the High, Hidden Cost of Inconsistent Decision Making