NEW YORK (AFP) – Bank of America Corp reported a decline in second-quarter profit on Monday, as higher interest rates eroded the bank’s expenses, including its large consumer banking franchise.
But like Goldman Sachs, Bank of America has seen a pickup in activity in its investment banking division, which has helped offset some of the weakness in other parts of the bank.
The Charlotte, North Carolina-based bank said Tuesday it earned $6.9 billion, compared with $7.4 billion in the year-ago period. On a per-share basis, Bank of America earned 83 cents, beating analysts’ estimates.
Although Bank of America saw higher loan growth and a higher return on assets in the quarter, a large portion of the bank’s interest income was eaten up by higher interest expense. Bank of America traditionally has a balance sheet made up of short-term securities, so when the Fed raised interest rates, Bank of America had to fund at a higher rate and faster than its peers.
The bank saw fewer credit losses and arrears than its competitors, which only increased the money it set aside for loan losses by a modest amount.
Bank of America’s investment banking division helped offset sluggish performance at its consumer bank, generating higher sales and trading revenue from its stock and bond trading desks, as well as more advisory revenue from its client banks.
The bank’s total revenues amounted to $25.4 billion, which represents a slight increase compared to $25.2 billion in the same period last year.
In premarket trading, Bank of America Corp shares rose 2 percent to $42.75.
