Bank of America Q2 net income surges 19%

The bank said that it reported a profit of $7.4 billion in the three months ended June 30, up from $6.2 billion in the same period a year ago.

On a per-share basis, BofA earned 88 cents, compared with 73 cents one year ago.

Its revenue of $25.2 billion came in just ahead of targets.

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 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. 

BofA’s net interest income grew 14% to $14.2 billion in the second quarter.

Bank of America executives told investors on a conference call that the bank expects net interest income for the full year to be slightly more than $57 billion, an increase of more than 8% over 2022.

BofA CEO Brian Moynihan said that while some customers have moved money into higher paying certificates of deposit, the average deposit balance at BofA still remains well above pre-pandemic levels.

Its trading revenue rose in the second quarter, in contrast to double-digit declines in trading revenue at Morgan Stanley, JPMorgan and Citigroup.

Charlotte, North Carolina-based 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.

The bank’s total expense for the quarter was $16 billion, including about $276 million in litigation costs. Earlier this month, two government agencies said they ordered BofA to reimburse customers more than $100 million and pay $150 million in fines for “double-dipping” on overdraft fees, withholding reward bonuses on credit cards and opening accounts without customer consent.

BofA’s unrealized losses rose by $7 billion to $106 billion in the period. 

(With inputs from AP)

Updated: 18 Jul 2023, 10:32 PM IST