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Bank of America profit falls less than expected on boost from loan growth, deposits

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Bank of America Corp. on Monday said its quarterly profit fell by $ 1 billion but the financial giant beat Wall Street’s earnings targets and booked healthy loan growth.

Bank of America shares rose 0.6% in premarket trading after the megabank said its first-quarter earnings fell to $ 7.1 billion, or 80 cents a share, from $ 8.1 billion, or 86 cents a share in the year-ago quarter.

First-quarter revenue increased to $ 23.2 billion from $ 22.8 billion in the year-ago quarter.

Bank of America beat the Wall Street targets for earnings of 75 cents a share and revenue of $ 23.1 billion, according to a FactSet survey.

In a hit to its earnings, Bank of America’s first-quarter net reserve release fell to $ 362 million from $ 2.7 billion.

The company characterized its first-quarter results as “strong despite challenging markets and volatility,” with net interest income up by $ 1.4 billion, a $ 70 billion increase in average loan balances to $ 978 billion, and an increase of $ 240 billion in average deposits to $ 2 trillion.

“Ongoing organic growth combined with good expense management drove operating leverage for the third consecutive quarter,” CEO Brian Moynihan said. “Our teammates supported our clients while managing through the impacts of the pandemic, war in Ukraine, and an evolving rate environment.”

Commercial loans increased by 16% to $ 539 billion, while consumer loans advanced by 4% to $ 435 billion.

Shares of Bank of America are down 15.6% so far in 2022, compared with a loss of 7.8% by the S&P 500 SPX,
-1.21%
and drop of 5.5% by the Financial Select Sector SPDR ETF XLF,
-1.13%.

The earnings from Bank of America come after JPMorgan Chase & Co. JPM,
-0.93%
reported earnings on Wednesday, followed by Wells Fargo & Co. WFC,
-4.51%,
Citigroup Inc. C,
+ 1.56%,
Goldman Sachs GS,
-0.10%
and Morgan Stanley MS,
+ 0.75%
on Thursday.

Overall banks have been grappling with lower investment banking revenue as deal-making dried up in the first quarter, but boosts in net interest income as interest rates have risen.

Also Read: Goldman, JPMorgan CEOs not worried about recession, for now

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