Bank of America reported a higher-than-expected jump in quarterly profit as bond trading surged and the lender earned more from advising on debt and equity offerings and deals.
Wall Street banks have been vitalized by increased market activity prompted by the so-called "Trump trade". Investors also changed their positions around the Brexit vote and the Federal Reserve's interest rate hikes, boosting trading revenue for the big U.S. banks.
Customers also borrowed more as the economy expanded, though the pace of loan growth has slackened somewhat recently.
"We saw good client activity in our balanced portfolio of businesses ... The U.S. economy continues to show consumer and business optimism, and our results reflect that," BofA Chief Executive Brian Moynihan said in a statement.
The second-largest U.S. bank's total revenue rose about 7 percent to $22.45 billion in the three months ended March 31, handily beating the average analyst estimate of $21.61 billion.
Revenue from BofA's trading activities, excluding special items, rose 21.2 percent to $4 billion, helped by a 29 percent increase in fixed-income trading revenue.
JPMorgan Chase & Co and Citigroup Inc last week also reported better-than-expected quarterly profit, driven by strong trading activity.
BofA's shares, which have risen about 34 percent since the presidential election on Nov. 8, were up 1.4 percent at $23.13 in premarket trading on Tuesday.
The bank's investment banking income jumped 37.4 percent to $1.58 billion, riding on the back of a strong recovery in global investment banking services, which includes M&A advisory and capital markets underwriting.
Net income rose about 44 percent to $4.35 billion. Earnings per share rose to 41 cents per share, topping the average analyst estimate of 35 cents per share. (bit.ly/2px3E6G)
Higher interest rates increased the amount of money banks can earn from their various loans, known as net interest income. BofA made $11.06 billion as net interest income in the quarter, up 5.5 percent from a year earlier.
The lender relies heavily on higher interest rates to maximize profits as it has a large stock of deposits and rate-sensitive mortgage securities.
The lender's non-interest expenses was nearly flat at $14.85 million.
Moynihan said last year he would make trimming costs a top priority and would shrink annual expenses by about an additional $5 billion by 2018.
(Reporting by Nikhil Subba in Bengaluru and Dan Freed in New York; Editing by Saumyadeb Chakrabarty)