BoA’s net income rises by 19%

Bank of America has announced a significant surge in profits, recording a growth of 19% in its latest quarter, following the trend set by other major banks benefiting from higher interest rates.

As the second-largest bank in the nation based on assets, Bank of America achieved a profit of $7.4 billion in the three-month period ending on June 30, up from $6.2 billion in the corresponding period the previous year. This translates to earnings of 88 cents per share, compared to 73 cents in the previous year. Analysts polled by FactSet had projected a profit of 84 cents per share.

The bank’s revenue reached $25.2 billion, slightly exceeding expectations.

Bank of America, along with its competitors, has capitalised on the inflow of wealthy clients, businesses, and other customers depositing funds in search of security after the recent bank failures. The largest banks in the country enjoy an implicit government safety net due to their “too big to fail” status among financial institutions.

Starting in March 2022, the Federal Reserve raised its benchmark interest rate from near zero to a range of 5% to 5.25%. These higher interest rates have enabled banks to charge more for borrowing. In the second quarter, Bank of America’s net interest income increased by 14% to $14.2 billion.

During the quarter, Bank of America allocated approximately $602 million to cover potentially non-performing loans. Many banks have been augmenting their loan loss reserves in recent quarters, anticipating increased borrowing by customers who refrained from doing so during the pandemic, coupled with the strain of inflation on household budgets.

Shares of Bank of America Corp. experienced a slight rise before the opening bell on Tuesday.