The Numbers
Bank of America reported a revenue of $7.4 billion final quarter, up almost 20 % from the 12 months earlier than.
Revenue grew greater than 10 %, to $25.2 billion within the second quarter.
Bank of America holds almost $2 trillion in buyer deposits, however like most banks, it’s seeing declines as prospects transfer their cash to accounts with increased returns: The financial institution’s common deposits dropped round 7 % within the second quarter, versus a 12 months in the past.
The financial institution additionally continued to make progress on a aim it laid out earlier this 12 months: shrinking its head depend by attrition. The financial institution, which had 288,000 workers in 2010, is now all the way down to about 213,000 (excluding summer time interns), roughly 4,000 fewer than 1 / 4 in the past. “That sets us up for a good trajectory on expense going forward,” mentioned Alastair Borthwick, the financial institution’s chief monetary officer.
Takeaways
Brian Moynihan, the financial institution’s chief government, referred to as the quarter one of many strongest within the financial institution’s historical past.
“We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market,” he mentioned. That echoed feedback from his counterparts at different large banks, and comes as economists debate the probability of a so-called tender touchdown, wherein inflation subsides with out massive job losses or a big slowdown in financial progress. Customer spending on credit score and debit playing cards rose 3 %, to $226 billion, the financial institution mentioned.
Notably, the lender’s investment-banking business rebounded within the second quarter, after a pointy drop in deal-making had solid a chill over the trade. The funding banking unit’s charges rose 7 %, to $1.2 billion, and its buying and selling income rose 3 %, to $4.3 billion.
“That’s probably the most important highlight of the quarter, I think, in the global banking business,” Mr. Borthwick mentioned. “We’ve got a little bit of pick up in equity capital markets, and that’s been a welcome sign for us.”
Context
America’s 4 largest banks — Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — have now reported almost $30 billion in revenue for the second quarter, up greater than 30 % from a 12 months in the past.
But massive penalties for misdeeds stay a routine expense on the greatest banks. Last week, Bank of America was fined $150 million by two federal regulators for charging its prospects improper charges and denying them promised sign-up bonuses. The financial institution reported $276 million in litigation prices final quarter, up from $89 million the earlier quarter, “driven by agreements reached on consumer regulatory matters.”
Banks are additionally bracing for a invoice for the failures this 12 months of three regional banks. Bank of America mentioned its bills within the second half of this 12 months may embody a $1.9 billion accrual if the Federal Deposit Insurance Corporation finalizes an evaluation on banks to cowl the prices of defending failed banks’ uninsured deposits.
What’s Next
Analysts will probably be intently watching outcomes on Wednesday from Goldman Sachs, which has struggled to get well from an ill-fated foray into shopper banking. They’ll additionally scrutinize smaller banks like Western Alliance as these lenders’ leaders attempt to shake off the results of the financial institution failures this 12 months that threw the complete regional banking sector into turmoil.
Source: www.nytimes.com