NEW YORK (AP) – Bank of America’s second-quarter profit more than doubled from a year earlier as the consumer banking giant was able to shift more credit to the “good” side of its balance sheet as the pandemic eased.
BofA is the latest major Wall Street bank to report an increase in profits this quarter, largely due to the improving economy and fewer delinquent borrowers. But like other banks, BofA saw a decline in interest income and earnings a year earlier due to lower interest rates.
The Charlotte-based bank said it earned $ 9.22 billion, or $ 1.03 a share, in the past three months. That’s up on earnings of $ 3.53 billion, or 37 cents a share, compared to the same period a year earlier. The results were better than analysts’ predicted earnings of 77 percent per share, according to FactSet.
Bank of America’s profit increased on two one-off items. The bank was able to free up $ 1.6 billion from its loan loss reserves, which it set aside during the pandemic to protect against defaults, and also registered a $ 2 billion one-time loan tied to certain taxable assets in the UK.
While Bank of America’s profits were up from a year ago, revenues weren’t. Interest income fell to $ 10.23 billion in the quarter from $ 10.85 billion a year earlier on lower interest rates. Bank of America’s balance sheet is more focused on short-term maturity securities, which means that a bank’s interest income can fluctuate more when interest rates change compared to other banks.
The bank also saw a decline in trading earnings, similar to what happened at JPMorgan Chase and Goldman Sachs. The second quarter of 2020 was extremely volatile as traders dealt with the fallout from the pandemic, giving Wall Street traders ample opportunity to seek investment to profit amid volatility. Now that the situation has cooled down, these profits have diminished.
The bank’s global markets division, which includes its trading desks, posted a profit of $ 908 million for the quarter. That’s down from $ 1.9 billion a year earlier.