Home / Business / Bank of America Profit Rise 33%

Bank of America Profit Rise 33%



Bank of America
Corp.


BAC -0.76%

said Monday that earnings for the second quarter increased 33%.

The quarterly profit of the Charlotte, N.C.-based bank, the second largest in the US of assets, was $ 6,784 billion, compared with $ 5,1

06 billion a year ago. Per share, the result was 63 cents. Analysts had expected 57 cents per share.

Sales for the second quarter decreased slightly, though to $ 22,609 billion, from $ 22,289 billion a year ago. Analysts had expected $ 22.286 billion.

The result was estimated to benefit from the latest corporate tax and higher interest rates. Rising interest rates are usually good for banks because they make a profit on the difference between what they pay on deposits and how much they collect on loans. In June, the Federal Reserve increased its reference rate, the seventh time it has done since it began to raise interest rates by the end of 2015.

Banks have been able to capture the most benefits of increases because customers are not widely demanding more interest in their deposits. The interest rate the bank paid on US interest-bearing deposits was 0.38%, compared to 0.30% in the first quarter.

Trading revenues, excluding accounting adjustments, increased almost 7% to $ 3,596 billion from $ 3,369 billion in the second quarter last year.

Quarterly expenditures decreased by 5% to $ 13,284 billion, from $ 13,982 billion a year ago.

Following a sharp rise in bank stocks after the 2016 election, investors have shown little enthusiasm for banks this year. Since the beginning of 2018, the KBW Nasdaq Bank Index is down 2%. Bank of Americas shares are down 3.3% so far this year.

Bank investors in recent weeks have been cautious about a continuous bond market phenomenon called a smoothing rate, where the difference between short-term government debt rates and longer rates is getting smaller. Usually long-term exchanges are higher than short-term exchanges. However, short-term government returns sometimes rise closer to the long-term, or exceed them, which is a stronger indication that a recession may fall within a year or two.

A possible recession would pose problems for the banks' operations.

Write to Rachel Louise Ensign at [email protected]


Source link