Profits at Bank of America surge 19% as interest income rises

(CTN News) – A 19% increase in net interest income drove Bank of America’s second-quarter net profit up 19% from the year before.

In the three months to June 30, the lender’s net profit soared to $7.4 billion, or $0.88 per diluted share, while revenue increased by 11 percent to $25.2 billion.

The lender reported a 14 percent increase in net interest income to $14.2 billion, driven by loan growth.

Bank of America shares, which have fallen 12.26 per cent so far this year, were trading 0.68 per cent higher in pre-market trading at $29.60.

Chairman and CEO Brian Moynihan said the company delivered one of its best quarters and first half earnings ever.

With a resilient job market, we continue to see a healthy US economy growing slowly.

The Bank of America sales and trading businesses performed well, particularly in terms of market share gains. In order to drive long-term value for stakeholders, we have maintained a strong balance sheet and ample liquidity.”

Net income from the consumer Bank of America division increased by $2.9 billion, or 39.1 percent. A total of 157,000 new consumer current accounts were opened in the second quarter, marking the 18th consecutive quarter of growth.

During the previous quarter, Bank of America recorded over 3 billion digital log-ins, an increase of 11%.

The lender reported that digital sales accounted for 51% of total sales, while consumer investment assets increased by 23% to $387 billion.

Global Bank of America and markets divisions earned $2.7 billion and $1.1 billion in net income, respectively.

In addition to deepening and establishing new relationships with existing clients, Chief Financial Officer Alastair Borthwick is driving operating leverage to grow the business organically.

“The overall health of the US consumer remained strong. Despite the pandemic, total losses remained low. We maintain a strong balance sheet with $190 billion of regulatory capital and a CET1 ratio nearly 120 basis points above the current minimum.”

CET1 is one of the key measures of Bank of America capital strength.

Dividends and share repurchases returned to shareholders by the Bank of America totaled more than $2.3 billion from April to June.

As part of its announcement, it also announced plans to increase its quarterly dividend by 9 percent in the third quarter.

After prices hit a four-decade high of 9.1% in June 2022, the Federal Reserve increased its benchmark rate for the 10th consecutive time in May to combat inflation.

During the past 16 months, the Fed has raised rates aggressively by a combined 500 basis points, their highest level since 2007.

In March 2022, the Fed paused raising interest rates for the first time since it began its monetary tightening cycle.

In any case, it indicated it would resume this year if necessary. The next meeting will be held on July 25 and 26.

According to Morgan Stanley, severance costs of $308 million associated with employee actions resulted in a 12 percent decline in second-quarter net income to $2.2 billion.

A challenging market environment resulted in solid results for the firm. Its chairman and chief executive James Gorman said Tuesday that the quarter began with macroeconomic uncertainties and subdued client activity, but ended with a more constructive tone.

As part of our strategy, we continue to attract client assets … for the second quarter in a row, we raised our quarterly common dividend by 7.5 cents. Maintaining a strong capital position in diverse market environments remains a priority for us.”

As of the second quarter, the investment bank has added $100 billion in net new assets, bringing in more than $200 billion so far this year.

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