Bank of America Second Quarter Profits Increase, Helped by Fewer Bad Debt | Economic news

By KEN SWEET, AP Business Writer

NEW YORK (AP) – Bank of America’s second quarter profit more than doubled from a year ago as the consumer banking giant was able to shift more loans to the ‘good’ side of its toll as the pandemic subsides.

BofA is the last of the big Wall Street banks to report higher profits this quarter, in large part due to the improving economy and fewer borrowers past due on their loans. But like other banks, BofA has seen its interest income and income decline from the previous year due to falling interest rates.

The Charlotte-based bank said it made $ 9.22 billion in the past three months, or $ 1.03 per share. This is an increase from earnings of $ 3.53 billion, or 37 cents per share, compared to the same period a year earlier. The results were better than the earnings of 77 cents per share that analysts had expected, according to FactSet.

Bank of America’s profits were inflated by two one-off items. The bank was able to free up $ 1.6 billion from its loan loss reserves it built up during the pandemic to guard against defaults, and also recorded a one-time credit of $ 2 billion linked to certain UK taxable assets.

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While Bank of America’s profits increased from the previous year, revenues did not increase. Interest income fell in the quarter to $ 10.23 billion from $ 10.85 billion a year earlier, on lower interest rates. Bank of America’s balance sheet is more focused on short-term securities, which means the bank’s interest income may fluctuate more when interest rates change relative to other banks.

The bank also saw a decline in trading revenues, similar to what happened at JPMorgan Chase and Goldman Sachs. The second quarter of 2020 was very volatile as traders weathered the impact of the pandemic, which gave Wall Street traders plenty of opportunities to find investments to take advantage of the volatility. Now that things have calmed down, those profits have diminished.

The bank’s global markets division, which includes its trading offices, reported a profit of $ 908 million in the quarter. That’s down from $ 1.9 billion a year earlier.

Copyright 2021 The Associated press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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