Advertisement
U.S. markets open in 8 hours 23 minutes
  • S&P Futures

    5,210.25
    -4.50 (-0.09%)
     
  • Dow Futures

    39,218.00
    -5.00 (-0.01%)
     
  • Nasdaq Futures

    18,188.00
    -43.50 (-0.24%)
     
  • Russell 2000 Futures

    2,048.40
    -1.40 (-0.07%)
     
  • Crude Oil

    82.59
    -0.13 (-0.16%)
     
  • Gold

    2,163.20
    -1.10 (-0.05%)
     
  • Silver

    25.30
    +0.03 (+0.14%)
     
  • EUR/USD

    1.0873
    -0.0004 (-0.03%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2717
    -0.0011 (-0.09%)
     
  • USD/JPY

    150.1170
    +1.0190 (+0.68%)
     
  • Bitcoin USD

    65,513.82
    -2,705.44 (-3.97%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    39,843.62
    +103.22 (+0.26%)
     

Bank of America profit slides in Q2 earnings; Johnson & Johnson earnings top expectations

Yahoo Finance’s Brian Sozzi, Alexis Christoforous, and Emily McCormick break down the earnings results for Bank of America and Johnson & Johnson.

Video Transcript

ALEXIS CHRISTOFOROUS: Back to those earnings now-- Bank of America and Johnson & Johnson, as we said, out with their earnings. I want to head over to Yahoo Finance's Emily McCormick, who has been following all the action there for us this morning. Emily, let's start with B of A. Earnings sliced in half last quarter, but still apparently enough to beat estimates.

EMILY MCCORMICK: That's right, Alexis. So low expectations heading into results for Bank of America. It did top those expectations, but there were some areas of weakness therein. So we really saw Bank of America get hit by the low-interest-rate environment that we're in now.

And that came through in its net interest incomes. We saw that metric fall 11% over last year to $10.85 billion. That was the lowest level since 2016 for B of A. Now Bank of America does tend to be one of those banks most sensitive to changes in interest rates. So that zero lower bound really is taking a toll on that bank's profitability.

Now on the other hand, it's similar to other banks that we've seen report earlier this week. We did see strong trading and investment banking revenues. And those did offset to a degree higher provisions due to the banks setting aside more in reserves for potential bad loans due to the pandemic.

So we saw investment banking fees of $2.2 billion during the quarter. That was a record. And trading was also a bright spot. We had revenue there up 35% to $4.4 billion, also driven by strength in fixed income trading.

Now those provisions for credit losses were $5.1 billion for Bank of America, the highest level since 2010. Now that was actually less than consensus analysts had been anticipating. They were looking for $5.5 billion. So B of A, one of the few banks to actually undershoot expectations on that front.

And then I also want to highlight a couple of headlines that we just had out on the earnings call. CEO Brian Moynihan said he expects intermittent economic shutdowns as the base-case scenario for Bank of America. He also sees recessionary conditions deep into 2022. So a grim outlook on the economy from B of A. Though shares are trading lower by just under 3% now. Alexis?

ALEXIS CHRISTOFOROUS: All right, I want to talk a little Johnson & Johnson. Profit there tumbling 35% last quarter. But J&J is doing something a lot of companies are not, Emily. And that's actually raising its full-year profit forecast. What are the details there?

EMILY MCCORMICK: That's right. So J&J did raise the entire range of its band for adjusted earnings per share. It now expects as much as $7.95 a share for the full year 2020 and revenue of as much as $82 and 1/2 billion. Now pharmaceutical worldwide operational sales were up 3.9%. That was really the strong point here for J&J.

On the flip side, we did see quite a bit of weakness on medical devices due, of course, to those elective surgery cancellations we've had during the quarter because of the pandemic. So we have medical device sales down about 39% to $4.2 billion. Now CFO Joseph Wolk did say during the earnings call this morning that devices were the hardest hit business unit in the second quarter. But a recovery is expected in the fourth quarter.

We have J&J trading just around the flatline as we speak. Alexis?

ALEXIS CHRISTOFOROUS: All right, thanks a lot, Emily.

Advertisement