July 14 (Reuters) - Bank of America reported a rise in second-quarter profit, driven by strong trading activity as global market volatility prompted clients to reshuffle their portfolios.
Global markets remained volatile during the reported quarter, driven by escalating geopolitical tensions as the United States and Iran struggled to reach a peace agreement.
The ongoing conflict sparked deep uncertainty regarding global crude supplies, prompting a sharp spike in oil prices that largely drove a plunge
in the S&P 500 energy sector in the second quarter.
Additionally, shifting interest rate expectations and stubbornly high inflation weighed on an otherwise robust quarter for major benchmark equity indexes.
The uncertainties forced market participants to take a cautious look at their holdings and reshuffle their portfolios in order to make the best possible returns from the markets.
Volatile markets tend to benefit large investment banks, as their trading desks generate higher revenue from increased client activity.
Bank of America's sales and trading revenue came in at a record $7.1 billion in the second quarter, up from $5.3 billion a year earlier. Equities revenue climbed 70% to $3.6 billion.
The bank's CEO had expected a 15% jump in trading revenue for the reported quarter.
The bank reported a net income of $9.1 billion, or $1.21 per share, in the three months ended June 30, compared with $7.2 billion, or 90 cents per share, a year earlier.
Shares of the bank, which have gained about 8% so far in 2026, were up 1.7% in trading before the bell.
INVESTMENT BANKING SHINES
Global mergers and acquisitions, valued at over $10 billion, surged to record levels during the first half of 2026, according to LSEG data. The surge was driven by a more lenient regulatory environment that prompted major companies across sectors to seize the opportunity to execute deals.
Bank of America Securities acted as a joint book-running manager for the record-breaking $2 trillion debut of Elon Musk's SpaceX, a historic listing that supercharged the U.S. initial public offering market and boosted its rebound in 2026.
The bank also acted as a financial advisor for U.S. power company NextEra Energy's $66.8 billion deal to buy Dominion Energy, announced in May.
BofA's total investment banking fees rose 50% to $2.1 billion in the second quarter. Chief Executive Officer Brian Moynihan said earlier this quarter that investment banking was in "pretty good shape".
"It was also an exceptional quarter for our markets-facing businesses, with investment banking fees up 50% year-over-year. Near-term, pipelines remain strong, and commercial borrowing has picked up," Moynihan said in a statement.
INTEREST INCOME SOLID
Strong consumer spending underpinned the resilient U.S. economy despite persistent macroeconomic uncertainty, serving as a vital catalyst for lenders.
Consumption has supported a steady demand for new loans, providing major commercial banks with a stable operational foundation through income from interests.
The bank's net interest income (NII) — the difference between what it earns on loans and pays out on deposits — rose 9% to $16 billion in the quarter from a year earlier.
Average loans and leases at Bank of America rose 1% to $321 billion from a year earlier.
(Reporting by Pritam Biswas in Bengaluru; Editing by Shinjini Ganguli)
