NEW YORK (AP) – Bank of America Corp. said its profits grew 19% in its most recent quarter, the latest of the big banks to see its bottom line boosted by higher interest rates.
The nation’s second-largest bank by assets posted a profit of $7.4 billion in the three months ended June 30, up from $6.2 billion in the same period a year earlier. On a per-share basis, BofA earned 88 cents, compared with 73 cents one year ago. Analysts were expecting profit of 84 cents per share, according to a poll by FactSet.
Prostate Health: Why Screenings are Key to Men’s Overall Wellness
September is Prostate Cancer Awareness Month. Prostate cancer is the second most common cancer among…
Learn More
Revenue, net of interest expense, rose 11% to $25.2 billion and net interest income rose 14% to $14.2 billion in the second quarter year over year.
CEO Brian Moynihan called the quarter one of the “strongest in the company’s history.”
“We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market,” Moynihan said. “A strong balance sheet and ample liquidity allowed us to continue investments in our franchise to drive long-term value for stakeholders.”
Like its major competitors, BofA has benefitted from wealthy clients, businesses and other customers moving deposits to the bank in search of safety after this spring’s bank failures. The nation’s biggest banks are seen as having an implicit government backstop, due to their “too big to fail” status among the country’s financial institutions.
The Federal Reserve has raised its benchmark interest rate to a range of 5% to 5.25% from near zero starting in March 2022. Those higher interest rates have allowed banks to charge more for customers to borrow. Bank of America’s net interest income rose 14% to $14.2 billion in the second quarter.
“Asset quality and the overall health of the U.S. consumer remained strong,” said Chief Financial Officer Alastair Borthwick. “Total loss rates remained below pre-pandemic levels. Our balance sheet remained strong with $190 billion of regulatory capital and a CET1 ratio nearly 120 basis points above our current minimum requirements.
“Capital strength allowed us to return more than $2.3 billion to shareholders in dividends and share repurchases, and we announced our plan to increase our quarterly common stock dividend by 9% in Q3-23, subject to approval by our Board of Directors,” Borthwick said in a statement.
BofA set aside roughly $602 million to cover potentially bad loans in the quarter. Many banks have been increasing their so-called loan loss reserves the last few quarters as customers start borrowing again after not doing so during the pandemic, and inflation starts stretching household budgets.
BofA data shows that consumers are incurring more household debt. Average credit card outstanding balances ending June 30 rose to $94.4 billion from $81.0 billion year-over-year.
(UPDATE: Comment from CEO Moynihan added in 4th paragraph, comments from Borthwick added in 8th and 9th paragraphs.)
(UPDATE: Credit card data added in 10th paragraph)
This story will be updated.
