Like its peers, the bank continued to release money it had set aside for the coronavirus recession.
Bank of AmericaCorp.BAC-2.51%said the economic rebound helped to more than double its profit, but low rates weighed on its revenue.
The nation’s second-largest bank by assets posted earnings Wednesday of $9.22 billion in the second quarter, up from $3.53 billion a year earlier. The bank earned $1.03 a share, beating the 77 cents forecast by analysts polled by FactSet.
Bank of America’s bottom line was lifted by its decision to release $2.2 billion of reserves it had set aside during the depths of the coronavirus pandemic to protect against a wave of soured loans. Like peers including JPMorgan Chase & Co., Bank of America has beenreleasing its loan-loss stockpilesas theU.S. economy rebounds.
“Consumer spending has significantly surpassed pre-pandemic levels, deposit growth is strong and loan levels have begun to grow,” CEO Brian Moynihan said.
Still, revenue in the second quarter was $21.47 billion, down 4% from $22.33 billion a year earlier. That missed analysts’ expectations of $21.8 billion. Bank of America has been the only major U.S. bank so far to miss analysts’ revenue predictions.
Investment-banking fees were a bright spot at JPMorgan andGoldman Sachs GroupInc.,which took advantage of companies’ thirst for deal making and posted double-digit gains in their investment-banking revenue. At Bank of America, however, investment-banking fees were down almost 2% to $2.12 billion. Advisory fees for mergers and acquisitions trailed peers.
Bank of America stock fell 2.5%. Still, bank stocks have outperformed the broader stock market this year as investors buy them to bet on the economic rebound.
Bank of America and its peers sit at the center of the U.S. economy. They have benefited from the reopening of businesses,record-high stock pricesand people’s increased willingness to spend after a year of hunkering down.
But low rates and tepid loan demand have challenged banks. Bank of America in particular is sensitive to interest rates. Net interest income of $10.23 billion in the second quarter was down 6% from $10.85 billion a year earlier.
While rates remain at rock-bottom levels, there are signs that lending is picking up. Outstanding loans and leases totaled $918.93 billion in the second quarter, up 2% from $903.09 billion in the first quarter but down from a year ago.
Noninterest income, which includes fees, fell 2% to $11.23 billion, from $11.48 billion a year earlier.
Bank of America, like its peers, suffered from a drop in trading, though its decline wasn’t as big. Adjusted trading revenue fell 19% to $3.6 billion from $4.41 billion a year earlier.
But investors have also been watching Bank of America’s expenses, which rose 12% from a year earlier to $15.05 billion due partly to higher compensation costs.