Bank of America tops Q1 earnings estimates, Goldman Sachs posts mixed earnings report

The Yahoo Finance Live team breaks down Bank of America and Goldman Sachs' Q1 earnings reports following last month's banking fallout.

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DAVE BRIGGS: We start with another big day for the big banks. Let's start with Bank of America, who beat expectations on the top and the bottom lines while posting a rise in profits, boosted largely by higher interest payments. However, deposits at the bank were down 2% after March's banking crisis spooked customers a bit. And on the earnings call, Bank of America CEO Brian Moynihan wasted no time defending the slowdown. Listen.

BRIAN MOYNIHAN: As you think through all the tightening actions of the Fed, the flows to alternative yielding assets, investments, and the disruption of the past quarter, our deposits continued to perform well, ending the quarter at $1.91 trillion. And if you think about it, that's about the same balance as we had in mid-October of 2022. So we've seen these balances stabilize.

DAVE BRIGGS: Also reporting this morning, Goldman Sachs beating on earnings but missing on revenue, falling 5% year over year, as it takes a hit from the sale of consumer loans and weaker than expected bond trading results. Goldman's fixed income trading revenue fell 17% on lower activity in currencies and commodities, while Bank of America's grew 30% year over year, driven by improved performance in mortgage, credit, and municipal products, Seana.

SEANA SMITH: Yeah, certainly, Dave, when you take a look at these reports, I mean, let's start with Goldman because, yes, it was clearly a very disappointing quarter here for the company. Their profit was off about 18% from a year ago. But the tone on the earnings call was pretty optimistic, given the stress that we had seen in the banking sector during the first quarter and given the fact that there's been so much talk of a recession.

Specifically what I'm talking about is when CEO David Solomon said on this earnings call that, quote, "the worst of the crisis is over." He also expressed some confidence here on the second half, some big strategic-- that was a quote there-- deal activity in the second half of the year.

When you take a look at the investment banking fees from this latest quarter, they were down 26% on a year over year basis. Some of that weakness there, they blamed it partly because of the drop that we have seen in dealmaking activity. Clearly, that's so crucial for a bank like Goldman. So that relatively optimistic tone that was heard on the earnings call, I think, is a little bit reassuring here for the sector.

DAVE BRIGGS: A little bit in contrast to Brian Moynihan, who said, our research team continues to predict a shallow recession will occur beginning of the third quarter of 2023. He did say, the US consumer is in great shape. But then contrasting that, when you take all these banks into consideration, the four biggest banks combined wrote down 3.4 billion in future loan losses. So that tells you they all believe, at some point, second half of this year, there is, if you want to use Jamie Dimon-like imagery, storm clouds on the horizon in some form or another.