The profit plunged by more than 50% due to increased provisions to deal with the impact from the Covid-19 pandemic
Bank of America headquarters in Charlotte, North Carolina. (Credit: Wikipedia.org/Nopira.)
Bank of America has reported a net income of $3.5bn for the second quarter of this year, posting more than 50% decline compared to $7.3bn in last year’s second quarter.
The sharp decline in profit includes impact of a $4bn reserve build mainly associated with a weaker economic outlook related to COVID-19.
The total revenue for the period was $22.3bn, which fell slightly from $22.8bn for the first quarter and $23.1bn for last year’s second quarter.
The net interest income declined 11% to $10.8bn, driven by lower interest rates, partially offset by loan and deposit growth. The non-interest income increased by 5% to $11.5bn, due to strong capital markets results, Bank of America said.
The non-interest expenses for the period were recorded to be $13.4bn, decreasing slightly from $13.5bn. Last year for the same period, the amount was $13.3bn.
The pre-tax income for this quarter was $3.8bn, decreasing from $4.5bn for the last quarter and falling significantly from $9bn for the Q2 of last year.
The loan and lease balances across business segments increased by $96bn or 11%, to $1 trillion. Deposits had also increased by $282.7bn or 21%, to $1.7 trillion.
Segment-wise income and expenses breakup of Bank of America
In the segment of consumer banking, the net income was $71m for the period. While, the total revenue of the segment stood at $7.8bn, yet the non-interest expenses and provision for credit losses amounted to $4.7bn and $3bn, respectively.
In the global wealth and investment management segment, the total revenue was $4.42bn, with provision for credit losses and non-interest expenses being $136m and $3.46bn respectively. The net income stood at $624, declining from $866m for the last quarter.
The bank posted a 2% increase in its total revenue of $5.09bn under its global banking segment. The increase in revenue was driven by higher investment banking fees and portfolio valuations.
Compared to the previous quarter, the net income of global banking segment increased from $136m.
Bank of America chairman and CEO Brian Moynihan: “In the most tumultuous period since the Great Depression, we delivered for our clients, our employees, our communities and our shareholders.
“Strong capital markets results provided an important counterbalance to the COVID-19-related impacts on our Consumer business, and our industry-leading digital capabilities allowed us to support clients amid difficult working conditions.
“We provided billions in credit to clients; announced a $1 billion, four-year commitment to drive economic and racial equality in our communities; strengthened our balance sheet by increasing deposits, capital and loan loss reserves; invested in technology and equipment to help keep our employees safe; and delivered for shareholders, earning more than twice our quarterly dividend.”