Bank of America Reports Big Jump in Profit on Higher Interest Rates

Bank of America reported a profit of $7.4 billion last quarter, up nearly 20% year-over-year.

Second quarter sales increased more than 10% to $25.2 billion.

Bank of America has nearly $2 trillion in customer deposits, but like most banks, deposits are declining as customers move funds into more profitable accounts. Average deposits fell about 7% in the second quarter compared to a year ago.

The bank also continues to make progress towards its headcount reduction target set earlier this year. The bank’s workforce has fallen from 288,000 in 2010 to about 213,000 today (excluding summer interns), about 4,000 fewer than a quarter earlier. “This puts spending on a good trajectory going forward,” said Alastair Borthwick, chief financial officer of the bank.

The bank’s CEO, Brian Moynihan, called the quarter one of the strongest in bank history.

“The U.S. economy remains healthy, but it is growing at a moderate pace and the job market is resilient,” he said. That echoes his comments at other big banks, where economists debate the possibility of a so-called soft landing in which inflation subsides without massive job losses or a sharp slowdown in economic growth. came out inside Customer spending on credit and debit cards rose 3% to $226 billion, the bank said.

Notably, the company’s investment banking business rebounded in the second quarter after a sharp drop in deal closures negatively impacted the industry. Investment banking fees rose 7% to $1.2 billion, while trading revenue rose 3% to $4.3 billion.

“I think this is probably the most important highlight of the quarter for the global banking business,” Borthwick said. “Equity capital markets are recovering a bit, which is a welcome sign for us.”

America’s Big Four Banks (Bank of America, Citigroup, JPMorgan Chase and Wells Fargo) now report second-quarter profits of nearly $30 billion, up more than 30% year-over-year bottom.

But hefty fines for fraud remain a daily expense at big banks. Bank of America was fined $150 million by two federal regulators last week for charging customers inappropriate fees and refusing promised enrollment bonuses. The bank reported legal costs of $276 million in the previous quarter, up from $89 million in the previous quarter, “due to reaching agreements on consumer regulation issues.”

Banks are also preparing to submit legislation in response to the failures of three regional banks this year. Bank of America said spending in the second half of the year could include a $1.9 billion accrual if the Federal Deposit Insurance Corporation finalizes its valuation of banks to protect uninsured deposits of failed banks. said to be sexual.

Analysts will be watching Wednesday’s results for Goldman Sachs, which is struggling to recover from its ill-fated foray into consumer banking. Smaller banks like Western Alliance will also come under scrutiny as financial leaders seek to shake off the fallout from this year’s bank failures that roiled the entire rural banking sector.

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