Bank of America reported a decrease in profits in the second quarter as increased interest rates impacted the bank’s expenses, especially within its consumer banking arm. Despite this, the bank’s investment banking sector experienced a boost in activity, offsetting some of the challenges faced in other areas of the business.
The North Carolina-based bank disclosed on Tuesday that it generated a profit of $6.9 billion in the quarter, down from $7.4 billion in the comparable period the previous year. Earnings per share stood at 83 cents, surpassing what analysts had predicted.
Bank of America observed growth in loans and higher returns on assets during the quarter, although a significant portion of the bank’s interest income was affected by rising interest expenses. With a balance sheet largely comprised of short-term securities, the bank had to swiftly adjust to the increased rates enforced by the Federal Reserve.
Despite the hurdles, the bank encountered fewer credit losses and delinquencies compared to its competitors, resulting in only a slight increase in the funds allocated for potential loan losses.
The investment banking segment of Bank of America played a vital role in compensating for the slower performance of the consumer banking division. Increased revenue from stock and bond trading as well as augmented advisory earnings from bankers contributed to this positive outcome.
Total revenue for the bank slightly rose to $25.4 billion from $25.2 billion in the same quarter of the previous year. Bank of America Corp. shares saw a 2% increase to $42.75 in premarket trading.
