NEW YORK (AP) – Bank of America Corp.’s second quarter profits fell 32%, the latest major U.S. bank to report a dip in earnings after a strong 2021.
A better reflection of performance at the country’s second largest bank this quarter was revenue, which increased from $21.5 billion, to $22.7 billion year over year, largely due to higher interest rates and an increased level of lending.
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Quarterly profit fell to $6.2 billion, or 73 cents per share, the bank reported Monday, compared with a profit of $9.2 billion, or $1.03 a share, in the same period a year earlier.
Profits last year were boosted after the bank releasing billions of dollars from its loan loss reserves, which is money the bank set aside in the pandemic to cover potentially bad loans.
Now, the company is again building back up its reserves, adding $500 million to its stockpile in the second quarter, versus the $1.6 billion it dumped in the second quarter of 2021.
JPMorgan Chase, Wells Fargo and Citigroup all reported double-digit profit declines last week, citing similar reasons.
Rising interest rates also boosted quarterly interest income, which increased 21.7% year-over-year to $12.4 billion.
This was partially offset by growing interest expenses, which more than doubled to $2.5 billion.
The net interest margin, the difference between interest income generated and the amount it pays out, rose 16 basis points to 1.69%.
Non-interest income fell 8.8% to $10.3 billion, with investment banking fee revenue cut in half.
Non-interest expense ticked up 1.5% to $15.3 billion, including a $250 million increase in employee compensation and benefits.
Total quarterly assets stood at $3.1 trillion, up 2.7% year-over-year, including a 12.2% jump in loans and leases. The $1.0 trillion in total quarterly loans was driven primarily by the $569.3 million in commercial loans, followed by $228.5 million in residential real estate loans.
The $2.0 trillion in quarterly deposits marked a 3.9% increase over a year ago, reflecting growth in U.S. interest-bearing deposits.
Wall Street is largely focusing on the outlook for the second half of the year because of the potential for a recession that could be triggered by inflation and the Federal Reserve’s aggressive maneuvers to combat rising prices. Last week JPMorgan’s Chairman and CEO Jamie Dimon said inflation, interest rate increases as well as the War in Ukraine were all likely “to have negative consequences on the global economy sometime down the road.”
Bank of America’s top official, Brian Moynihan, was a bit more bullish in his comments about the economy in prepared remarks Monday, saying that the U.S. consumer remains “resilient” despite economic uncertainty.
Shares of Bank of America Corp., based in Charlotte, N.C. fell 2% before the opening bell.
