Bank of America reported a decline in profits for the second quarter, attributing it to higher interest rates impacting expenses, particularly within its consumer banking segment. Despite this, the bank experienced a resurgence in its investment banking division, partially offsetting weaknesses in other areas.
The Charlotte, North Carolina-based bank disclosed a profit of $6.9 billion for the quarter, down from $7.4 billion in the same period last year. Earnings per share stood at 83 cents, surpassing analysts' expectations.
While Bank of America observed increased loan growth and higher returns on assets, a significant portion of its interest income was absorbed by elevated interest expenses. The bank's preference for shorter-term securities meant that the Federal Reserve's interest rate hikes necessitated quicker financing at higher rates compared to its peers.
Bank of America managed to keep credit losses and delinquencies lower than its competitors, resulting in only a slight increase in the funds allocated for potential loan losses.
The bank's investment banking arm played a crucial role in compensating for the subdued performance of its consumer banking division. Improved sales and trading revenue from stock and bond desks, along with increased advisory revenue from bankers, contributed to this positive outcome.
Total revenue for the bank reached $25.4 billion, a slight uptick from $25.2 billion in the corresponding period last year.
In premarket trading, Bank of America Corp. shares rose by 2% to $42.75.
