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Bank of America Corp.
BAC -3.20%
said the economic rebound had more than doubled its profits, but low rates were weighing on its income.
The country’s second-largest bank in terms of assets on Wednesday posted second-quarter profit of $ 9.22 billion, down from $ 3.53 billion a year earlier. The bank earned $ 1.03 per share, beating the 77 cents forecast by analysts polled by FactSet.
Bank of America’s bottom line was improved by its decision to release $ 2.2 billion in reserves it had set aside during the height of the coronavirus pandemic to protect itself against a wave of bad loans. Like its peers, including JPMorgan Chase & Co., Bank of America has released its loan loss inventory as the US economy rebounds.
“Consumer spending is well above pre-pandemic levels, deposit growth is strong and lending levels have started to rise,” said CEO Brian Moynihan.
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Bank of America and its peers are at the center of the US economy. They have benefited from reopening of companies, record stock prices and increased willingness of people to spend after a year of downturn.
But low rates and weak demand for loans challenged banks. Bank of America in particular is sensitive to interest rates. Second-quarter net interest income of $ 10.23 billion was down 6% from $ 10.85 billion a year earlier.
As rates remain at their lowest, there are signs that lending is picking up. Outstanding loans and leases totaled $ 918.93 billion in the second quarter, up 2% from $ 903.09 billion in the first quarter, but down from a year ago.
Non-interest income, which includes fees, fell 2% to $ 11.23 billion, from $ 11.48 billion a year earlier.
In total, second-quarter revenue was $ 21.47 billion, down 4% from $ 22.33 billion a year earlier. This missed analysts’ expectations of $ 21.8 billion.
The Charlotte, NC lender’s investment banking fees were down slightly from a year earlier.
Bank of America, like its peers, suffered from a decline in trade, although the decline was not as large. Adjusted trading revenue fell 19% to $ 3.6 billion from $ 4.41 billion a year earlier.
The bank’s shares fell 2.3% in morning trading. Bank stocks have outperformed the broader stock market this year, with investors buying them to bet on the economic rebound.
But investors also watched spending at Bank of America, which rose 12% from the previous year to $ 15.05 billion from $ 13.41 billion.
Write to Ben Eisen at [email protected]
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