Bank of America net income jumps 19%, extending the rally for big banks
Bank of America 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.
Revenue of $25.2 billion came in just ahead of target.
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.
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.
Shares of Bank of America Corp. rose slightly before the opening bell Tuesday.