BoA to cut 4,000 jobs despite

Bank of America has posted better-than-expected profits for Q1 2023, driven in part by high interest payments and its bond traders’ best quarter in a decade. However, it also announced 4,000 job cuts. While rivals JP Morgan and Citigroup both saw windfalls from interest payments, they have also set aside billions to prepare for an anticipated economic downturn. Bank of America’s Q1 performance was strong, despite the economic challenges posed by market and banking sector volatility, said CFO Alastair Borthwick.

Although Bank of America shares had initially risen following the announcement, they later dropped. The collapse of two US lenders in March and subsequent concerns about a looming recession has affected bank stocks, leading to depositors moving their cash to larger institutions. Bank of America CEO Brian Moynihan, however, has suggested that a shallow recession is expected, starting in Q3 2023. Although deposits at Bank of America fell 1% to $1.91tn, credit and debit card spending rose by 6%.

Bank of America’s revenue for the consumer banking unit rose 21% to $10.7bn. Net interest income, which measures money charged to customers as interest, increased by 25% to $14.4bn. The bank has built $124m in reserves during Q1, compared to a release of $362m in 2022, ahead of anticipated interest rate rises by the Federal Reserve. However, the bank has forecast a 2% drop in NII for Q2 compared to Q1.

The first quarter of 2023 saw global mergers and acquisitions activity slump to its lowest level in over a decade, affecting Wall Street investment banks, prompting job cuts. Bank of America’s investment banking fees fell 20% to $1.2bn in Q1, although revenue, net of interest expense, rose 13% to $26.3bn, exceeding analyst expectations.