Bank of America reported an 18% drop in first-quarter profit as it grappled with higher expenses due to the impact of rising interest rates.
NEW YORK — Bank of America reported an 18% drop in first-quarter profit as it grappled with higher expenses due to the impact of rising interest rates. However, the results exceeded analysts’ expectations.
The Charlotte, North Carolina-based bank posted a profit of $6.67 billion, or 76 cents a share, compared with profit of $8.2 billion, or 94 cents a share, in the same period a year earlier. BofA was required to pay his $700 million one-time payment to the Federal Deposit Insurance Corporation to help replenish the agency’s deposit insurance fund.
Excluding that one-time charge, the bank earned 83 cents per share.
Bank of America has spent the past year grappling with the impact of rising interest rates on its lending and investment portfolio. The bank bought a significant number of bonds when interest rates were low during the pandemic, but the value of those bonds declined as interest rates rose.
Banks have also increased the amount they pay out on deposits, which is putting some pressure on profits. Banks’ net interest yield, a measure of how much profit they earn from the loans they hold compared to the interest they have to pay to depositors, will rise from 2.20% in 2023 to 1.99% in 2024. decreased.
Sales at BofA’s consumer banking division, the largest by revenue and profit, fell 5% to $10.2 billion. The bank said consumers are opening more accounts and spending more on credit and debit cards, but banks are increasing the He said more funding needed to be secured.
Investment banking was one of the bank’s strengths in the quarter, with global investment banking fees rising 35% in the quarter. Equity and fixed income trading were essentially flat, with fixed income trading revenues decreasing and equity trading revenues increasing.
