BoA: Low Quality Beat, Credit Metrics Weak. Poor Lateral For PPB, Aareal.

Bank of America beat estimates but driven by (low quality) IB revenues and an improved tax charge. Credit metrics weakened, especially looking at CRE. This is a weak lateral for US regional peers, alongside PBB, Aareal and Deutsche Bank in Europe, we feel.

• Key credit metrics: CET1 is 13.4% (flat on Dec-23) but around 10bp lower than consensus. Non-performing loans are up (to 58bp of loans from 54bp at Dec-23) and charge-offs are up (to 58bp from 45bp in 4Q23), almost entirely from the cards business and CRE. Both of these are weaker than consensus had, which we think is a credit negative and reads poorly for CRE-exposed peers.
• Other lines: revenues are c.1% ahead of expectations, entirely driven by the IB and, within this, primary and secondary equities, we feel. After yesterday’s commentary from Goldman hinting at the exceptional nature of 1Q24 trading, we feel this will be the subject of some questioning today.
• Outlook: there is no outlook statement of any note here at all, including in the presentation so this will be a key area for the call.