NEW YORK (AP) — Bank of America said its profits fell in the second quarter, as higher interest rates ate into BofA’s expenses, including its large consumer banking franchise.
But like Goldman Sachs, Bank of America saw a resurgence of activity in its investment banking division which helped make up for some of the weakness in other parts of the bank.
The Charlotte, North Carolina-based bank said Tuesday it earned a profit of $6.9 billion, compared with $7.4 billion in the same period a year earlier. On a per share basis, BofA earned 83 cents, beating analysts’ estimates.
While Bank of America did see higher loan growth and more return on its assets in the quarter, much of the bank’s interest income was eaten up by higher interest expenses. Bank of America traditionally keeps a balance sheet of shorter-term securities, so when the Federal Reserve raised interest rates, BofA had to finance at the higher rate more quickly than its peers.
The bank saw fewer credit losses and delinquencies than its competition, only increasing the money it set aside for loan losses by a modest amount.
Bank of America’s investment banking division helped make up for the sluggish performance in the consumer bank. The bank had higher sales and trading revenue from its stock and bond trading desks and more advisory revenue from its bankers.
Total revenue at the bank was $25.4 billion, up modestly from $25.2 billion in the same period a year earlier.
In morning trading, Bank of America Corp. shares rallied 5.2% to $44.09.
