Here’s a Trump bump stumper: In an economy where animal spirits have been unleashed by loosening regulations, and juiced this year by President Donald Trump’s tax cuts, Bank of America continued a string of lackluster second-quarter earnings for the big banks.
On Friday, Citigroup reported disappointing trading results. Lending at Wells Fargo dropped in the quarter. Unlike those two banks, Bank of America reported earnings on Monday that beat expectations. Still, the results underscored that banks, and the economy in general, have not been boosted as much as expected by Trump’s deregulation and economic agenda — at least as indicated by the run-up in the market in the year after the election.
Business borrowing at Bank of America, which was first supposed to be fueled by animal spirits and then the tax cuts, did rise 5 percent in the quarter. Overall, though, lending didn’t rise as much as analysts were expecting. Investment banking fees dropped 7 percent. Revenue, after excluding a one-time gain from a year ago, was up 3 percent. And earnings were up 33 percent. But much of that income jump was the result of this year’s corporate tax cut. Without it, Bank of America’s second-quarter profit would have risen slightly less than 5 percent.