Bank of America, which was reduced by Buffett and Kuwait, is doing great! The stock price welcomes performance catalysts, and market fluctuations boost trading prosperity

According to Zhitong Finance APP, Bank of America (BAC.US), the second-largest commercial bank in the United States, which previously faced significant sell-offs from "stock god" Warren Buffett and the Kuwait Sovereign Wealth Fund, reported strong earnings, driving its stock price up nearly 3% in pre-market trading, approaching the historical high set a few days ago. The financial report shows that traders at Bank of America Corp. made a significant contribution in the second quarter, with trading revenue reaching the strongest second-quarter performance ever, mainly due to severe fluctuations in the stock market and a strong rebound in U.S. stocks, while net interest income also exceeded Wall Street analysts' expectations.

In its earnings statement on Wednesday, the company stated that for the three months ending in June, trading revenue from Fixed Income, Currencies, and Commodities (FICC) surged 19% to $3.25 billion, helping Bank of America's earnings per share significantly exceed analysts' expectations. Equity trading revenue also saw a rare substantial increase of nearly 10% to $2.13 billion since 2021, also above expectations. Overall trading revenue for Bank of America in the second quarter was approximately $5.4 billion, a year-on-year increase of 14%, marking the 13th consecutive quarter of year-on-year growth.

Since U.S. President Donald Trump announced tariffs on global trading partners in April, stock market volatility has swept the globe. This has been a significant boon for Bank of America and its Wall Street peers' market trading businesses, mainly due to a surge in client trading activity, while the anticipated strong rebound in the M&A market has not materialized.

The second-largest commercial bank in the U.S. also reported that net interest income—its key revenue source—increased by 7.1% to $14.7 billion. Wall Street analysts had originally expected NII (net interest income from loans minus interest paid to depositors) to grow by 6.5%, but Bank of America's actual NII exceeded expectations.

"Consumers remain resilient, consumer spending and the quality of clients' assets are healthy, and the utilization rate of commercial borrowers continues to rise," said Bank of America CEO Brian Moynihan in the earnings statement. "Additionally, our market business is also showing good momentum."

Overall, Bank of America achieved an unexpected increase in net profit in the second quarter, with net profit rising 3.2% year-on-year to $7.12 billion, higher than the $6.56 billion that analysts generally predicted.

Bank of America's performance, which exceeded market expectations, further demonstrates the strong earnings growth of some of the largest banks in the U.S. at the beginning of Trump's second term. Policymakers and investors are eager to gain insights into the latest state of the U.S. economy from these banking giants that serve a large number of American consumers and businesses.

On Tuesday, both JP Morgan and Citigroup reported earnings that significantly surpassed analysts' expectations, particularly boosted by their equity trading and investment banking businesses. Executives from both banks expect market trading momentum to continue, as corporate clients gradually adapt to geopolitical tensions and the actual tensions visibly ease, leading to continued growth in market risk appetite and investment banking pipelines Bank of America reported quarterly revenue of $26.5 billion, the second highest in history, slightly below the consensus estimate of $26.6 billion from analysts. The adjusted earnings per share were $0.89, exceeding the average analyst expectation of $0.85. Bank of America's investment banking revenue fell 7% year-on-year, indicating a sluggish recovery in the company's large transaction facilitation business, but it performed better than analysts expected; merger advisory fees decreased by 11% year-on-year, while revenue from equity and bond issuance fell by 8.1% and 4.9%, respectively.

Chief Financial Officer Alastair Borthwick stated during a conference call with reporters after the earnings announcement that April was a "difficult month," but there was a recovery in May and June, returning to "more normal levels." He said, "All of this is encouraging for us," and he expects further improvement in investment banking in the second half of the year.

Bank of America's non-interest expenses increased by 5.4% year-on-year to $17.2 billion. As of the end of the second quarter, the company's loan balance rose to $1.15 trillion, an 8.5% year-on-year increase, surpassing the analyst expectation of $1.12 trillion. If lower interest rates ultimately stimulate more borrowing and reduce loan costs, lending has been a key focus for investors.

Bank of America, headquartered in Charlotte, North Carolina, saw its stock price rise nearly 3% in pre-market trading. As of Tuesday, Bank of America's stock price has increased by 4.6% over the past 12 months, compared to a 19% rise in the S&P 500 Financial Index.

Bank of America stock is expected to continue hitting new highs amid reductions by "the Oracle of Omaha" and "white knights."

Following significant reductions in Bank of America stock by Warren Buffett, known as "the Oracle of Omaha," another key institutional investor that firmly supported Bank of America (BAC.US) during the peak of the 2008 financial crisis, the Kuwait Sovereign Wealth Fund, has also begun to significantly reduce its holdings.

According to insiders, Kuwait's trillion-dollar sovereign fund, the Kuwait Investment Authority (KIA), sold up to $3.1 billion worth of shares in the second-largest commercial bank in the U.S. in early July. This non-registered block trade was priced at $47.95 per share, which is the lower end of the price range set by Wall Street financial giant Goldman Sachs, and is near Bank of America's historical highest stock price.

The sovereign wealth fund's investment support dates back to January 2008, when it injected $2 billion into Merrill Lynch, which was facing unprecedented subprime losses, making it one of Merrill's largest supporters at the time. The sovereign wealth fund later converted its preferred shares into common stock. Later that year, as the global financial crisis intensified, Bank of America agreed to acquire the liquidity-stricken Merrill Lynch. Since then, the Kuwait Investment Authority has maintained a long-term holding of shares and occasionally increased its position.

The decision by the Kuwait Investment Authority to sell shares comes as it overall reduces its investments in financial services stocks. For Bank of America, this move continues the exit pace of another "white knight" from the financial crisis—namely, "the Oracle of Omaha" Buffett, who had recently significantly reduced his holdings in Bank of America stock Berkshire Hathaway Inc., under Warren Buffett, was once the largest institutional investor in Bank of America. Since last year, it has been continuously reducing its holdings in the bank's stock, disclosing reduction transactions almost daily, until its shareholding ratio fell below 10%, thus no longer needing to update the reduction disclosures in a timely manner.

Driven by strong performance, coupled with deregulation led by Trump and robust dividends, Bank of America’s stock price is expected to reach new highs. Since the beginning of this year, propelled by the resilience of the U.S. economy, along with the significant positive expectation of the Federal Reserve soon loosening regulatory standards for the U.S. banking industry, and the catalyst of the Federal Reserve announcing that all large banks passed the annual stress tests and increased dividends, the U.S. financial sector has surged strongly, with the KBW Bank Index, covering 24 constituent stocks, rising to and maintaining near a high of 2025 this month