New York, Apr. 18 (BNA) Earnings grew 15% in the most recent quarter, Bank of America said, the latest of major banks to perform exceptionally well this earnings season as investors and consumers flock to Wall Street in search of safety after the failure of the silicon company. Wadi Bank and Signature Bank.
The country’s second-largest bank by assets made profits of $8.2 billion, up from $7.1 billion in the same period a year earlier. On a share basis, Bank of America earnings rose to 94 cents from 80 cents. The Associated Press (AP) reported that the results exceeded analysts’ expectations.
Like its main competitors, Bank of America has benefited from wealthy clients, corporations and other customers turning to the bank as a safe haven after the banks failed last month. The country’s largest banks are seen to have tacit government backing, due to their “too big to fail” status among the country’s financial institutions.
The Charlotte, North Carolina-based bank added customers in its commercial and consumer banking businesses. While deposits across the company fell 1% from the start of the year, executives said deposit outflows would have increased had new clients not started banking with Bank of America in March. Banks across the industry are seeing deposits decline on a large scale as inflation prompts customers and businesses to tap into savings to pay expenses.
Bank of America’s results were driven by higher interest rates, which allowed the bank to charge customers more for borrowing. Net interest income rose 25% to $14.4 billion in the first quarter.
But Bank of America pays more to depositors too, making it the latest bank to have to compete to hold deposits as customers look for other places to store their money in higher-yield CDs, money market accounts or online savings accounts. The bank was paying an average of 1.38% to customers for their deposits, up from 0.96% a year earlier.
The bank set aside approximately $930 million to cover potential bad loans in the quarter. Many banks have increased so-called loan-loss reserves over the past few quarters as customers begin to borrow again after not doing so during the pandemic, and inflation begins to overwhelm household balance sheets. But the bank said it is not concerned about consumer health as shipments remain lower than they were before the pandemic.
Shares of Bank of America rose 2% in pre-market trading on Tuesday.