The Bank of America gave a bullish profit forecast as the second-largest lender in the US reported better-than-expected gains and eliminated the fears of recession that have intensified following the war in Ukraine.
The Charlotte-based bank expects net interest income, a closely examined index that measures the profitability of bank deposits, to jump about 20% in the current quarter, driven by higher interest rates and loan recovery.
BofA, the last of the U.S. mega-banks to report earnings, was the only major lender to announce an increase in revenue in the first three months of the year. Total revenue rose 2% to $ 23.2 billion, driven by a 13% increase in net interest income, When lending soared above pre-plague levels for the first time and the bank Depressed aggressively Deposits for the purchase of fixed-income securities. This was in line with analysts’ expectations of $ 23.1 billion.
However, net income fell 12% year-on-year, with gains boosted by the release of $ 2.7 billion in credit balances to cover epidemic-related loan losses, which never materialized.
Overall, first-quarter earnings were $ 7.1 billion, or 80 cents a share, compared to $ 8.1 billion or 86 cents a share, a year earlier. Analysts asked by FactSet forecast earnings of 75 cents a share.
CEO Brian Moynihan said in a conference call with Wall Street analysts that deposit levels remained high and credit losses were still close to a historic low, indicating that companies and consumers have the ability to borrow more.
“Can there be a slowdown in the economy? Maybe,” he said. “But right now, the size of the economy is bigger than pre-epidemic levels, consumer spending remains strong, unemployment is low and wages are rising.”
BOFA reported gains amid growing concerns the U.S. could fall into recession when U.S. consumers face The fastest inflation rates While generation and war in Ukraine are troubling the world economy.
However, BofA has added just $ 30 million in credit provisions. At the end of the quarter, the bank had about $ 700 million in loans Companies in Russia. Elsteyer Burtwick, VP of finance, described her direct Russian exposure as “very minor”.
“All we are really doing is helping our customers release their existing contracts,” he told reporters. “It’s just not essential to the Bank of America.”
The double-digit growth in the Bank’s net interest income offset an 8% decline in commission income resulting from a slowdown in investment banking. Trading revenues fell 7%, but came ahead of analysts’ expectations due to a record quarter for BofA’s equities division, in which revenues grew 9% to $ 2 billion.
BofA offers rosy revenue outlook as lending rebound boosts results Source link BofA offers rosy revenue outlook as lending rebound boosts results