The US bank has seen an increase in issuance and sales of structured products over the last quarter.

Bank of America (BofA) has increased its US structured product sales by 21% in the second quarter of 2021 with US$621m accounting for 166 products, compared with US$513m for 37 products in the same period a year prior.

However, the bank’s Q2 21 sales volume represents a 25% fall from the value of the previous quarter despite a higher number of structured products being issued.

Over the past year, BofA’s issuance has grown significantly reaching 106 structured products (US$702m) in the third quarter of 2020, steadying in the final quarter with 111 products worth US$478m, before being boosted to 187 products in the first quarter of 2021 with US$825m.

During the second quarter, SRP data recorded an uptick in the products tied to tech and leisure underlyings such as Netflix.

The most recent example is the STEP Income Securities-Netflix, a recently issued structured note which struck on 29 April 2021. Both issued and distributed by BofA Finance and Securities, the registered note is a growth and income product with a digital and reverse convertible payoff. The product sold US$18.4m.

ESG and renewable energy have also emerged as being popular underlying sectors in Q2 21 - BofA also launched in Q2 the Contingent Income Auto-Callable Yield Notes - Worst of Option.

This three-year income note which struck on 17 May 2021 tracks the performance of the iShares Global Clean Energy ETF and Invesco Solar ETF. The note features a knock-out, reverse convertible, and worst of option payoff structure.

During Q2 21, a higher volume of structured products issued by BofA fell under the ETF asset class with US$49m accounting for 19 products, according to SRP data. This can be compared with US$15m accounting for three products in Q2 20.

Other popular asset classes include index baskets (US$378m/110), single indices (US$100.5m/14), and hybrids (US$19.2m/5).

Business lines

Bank of America, which is led by Brian Moynihan, reported a net income of US$9.2 billion in Q2 21, a 62% decrease from the same quarter of 2020 where net income totalled US$3.5 billion.

Net interest income stands at US$10.2 billion, which represents a slight drop from its Q2 20 figure of US$10.8 billion.

Provision for credit losses decreased by US$6.7 billion to a benefit of US$1.6 billion, reflecting a reserve release of US$2.2 billion amid an improved macroeconomic outlook.

Global markets reported a lower net income of US$908m from US$2 billion in the previous quarter, and US$1.9 billion in Q2 20. Revenues of US$4.7 billion also tumbled by 12%, driven by lower sales and trading results from a strong year ago period.

Equities revenue increased by 33% to US$1.6 billion, driven by a stronger trading performance and increased client activity in derivatives.

Risk-weighted assets (RWAs) stand at US$1.6 trillion compared with US$1.5 trillion in Q1 21, and US$1.4 trillion in Q2 20.

Click in the link to view BofA’s second quarter earnings report.