Bank of America beats 1Q expectations on loan growth

18 avril 2022

New York  - Bank of America saw its net profit fall in the first quarter while beating expectations, thanks to the growth in loans granted to its customers and the drop in reserves set aside to meet possible unpaid.

This made it possible to compensate in particular for the drop in income generated by its investment bankers and brokers. Individuals and small businesses registered with Bank of America remain in good financial health as a whole.

The sums intended to cover their arrears fell by 52%. The bank, which had put billions aside at the start of the pandemic to deal with the possible bankruptcies of its customers, further reduced its reserves, by $362 million. The amount of loans granted to its customers has, at the same time, increased by 10%.

At the same time, deposits in retail banking increased by 14% and spending on debit and credit cards increased by 15%. Between deposit and loan growth and rising interest rates, net interest income, the difference between the interest Bank of America earns on loans to its customers and the interest it pays to savers and other creditors, jumped 13%.

This performance helped to partially offset the 35% drop in fees in investment banking, with many firms preferring to refrain from raising money in the markets given the current uncertainty.

Turnover from brokerage activities fell by 7%. Bank of America's total revenue fell 2% to $23.2 billion, slightly above the $22.9 billion expected by analysts.

Its net profit fell 13% to $6.6 billion.

On a per-share basis and excluding items, the preferred measure of investors on Wall Street, its profit was 80 cents, higher than the 74 cents expected.,The action took 1.4% in electronic trading prior to the opening of the New York Stock Exchange. The other major Wall Street banks released their results last week, with profits down from a particularly lucrative first quarter in 2021 but above expectations.

The investment banks Goldman Sachs and Morgan Stanley in particular benefited from the solidity of their brokerage activities, while JPMorgan Chase, Citigroup and Wells Fargo were able to count on the relative good financial health of their clients, but inflation, the uncertainty over US monetary policy and the war in Ukraine are weighing on their outlook.