Strong consumer business boosts Bank of America earnings

Bank of America's revenues rose 2.4 per cent to US$23.1 billion. — Reuters pic
Bank of America's revenues rose 2.4 per cent to US$23.1 billion. — Reuters pic

NEW YORK, July 17 — Bank of America scored record profits in the second quarter, as strong consumer banking results offset a decline in earnings from trading worldwide.

Bank of America, the second biggest US bank by assets, reported today that profits jumped 10 per cent from last year to US$7.1 billion (RM29.2 billion) in profits, setting a new record.

Revenues rose 2.4 per cent to US$23.1 billion. 

The bank notched sizeable increases in loans and deposits and offered an upbeat appraisal of the US economy.

“Our view of the economy reflects the activity by the one-in-two American households we serve, which points to a steadily growing economy,” chief executive Bryan Moynihan said.

“We see solid consumer activity across the board, with spending by Bank of America consumers up five per cent this quarter over the second quarter of last year.”

The bank posted higher profits in its consumer segments thanks to a jump in net interest income, the difference between the interest rates it charges for loans and the rate it pays for deposits.

However, profits in this business could be challenged in the upcoming shift in Federal Reserve monetary policy. 

The Fed raised the benchmark borrowing rate last year, but it seen as virtually certain to backtrack and make a cut later this month.

The bank’s chief financial officer, Paul Donofrio, cited evolving monetary policy as one factor that led to lower trading volumes, which weighed on profits in global markets.

“There was just less activity,” Donofrio told reporters on a conference call. “You probably just need to see a little more confidence about global growth. It would help to clear up some of the concerns people have about trade.”

Shares of Bank of America dipped 0.3 per cent to US$28.91 in pre-market trading. — AFP

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