Ris­ing in­ter­est rates boost BofA prof­its

Kuwait Times - - BUSINESS -

Con­sumer bank­ing gi­ant Bank of Amer­ica re­ported a 10 per­cent rise in sec­ond-quar­ter prof­its yes­ter­day as gains from higher in­ter­est rates were more than enough to off­set a drop in trad­ing rev­enue. The Char­lotte, North Carolina-based bank said it earned $5.27 bil­lion, or 49 cents per share, com­pared with $4.78 bil­lion, or 43 cents per share, in the same pe­riod a year ear­lier. The re­sults beat an­a­lysts’ fore­casts of 43 cents a share.

Like its com­peti­tors, Bank of Amer­ica ben­e­fited from ris­ing in­ter­est rates. The Fed­eral Re­serve has raised in­ter­est rates three times since De­cem­ber, which has al­lowed banks like BofA to charge higher in­ter­est rates to bor­row­ers when they take out loans.

Be­cause of its large con­sumer bank­ing di­vi­sion, Bank of Amer­ica’s for­tunes, as the na­tion’s sec­ond­largest bank by as­sets, are of­ten more di­rectly tied into in­ter­est rates than its ri­vals JPMor­gan Chase, Cit­i­group and Gold­man Sachs, who have much larger trad­ing di­vi­sions and are less ex­posed to short-term in­ter­est rates. Bank of Amer­ica’s net in­ter­est in­come in­creased 9 per­cent in the quar­ter com­pared to a year ago to $10.99 bil­lion.

“Against mod­est eco­nomic growth ... we had one of the strong­est quar­ters in our his­tory,” said BofA CEO Brian Moyni­han in a state­ment.

BofA did ex­pe­ri­ence some dif­fi­culty on its trad­ing desks this quar­ter, how­ever. The bank’s trad­ing di­vi­sion re­ported prof­its of $830 mil­lion in the quar­ter, down 25 per­cent from a year ear­lier, largely due to a slide in trad­ing rev­enue. Other ma­jor banks have said that last quar­ter’s qui­eter mar­ket con­di­tions kept traders on the side­lines, which in turn kept a lid on bank trad­ing rev­enues. The pain was par­tic­u­larly felt in BofA’s fixed-in­come trad­ing di­vi­sion, where rev­enue fall 14 per­cent. —AP

This July 18, 2016 file photo shows a Bank of Amer­ica ATM in Woburn, Mass. Bank of Amer­ica Corp. re­ports fi­nan­cial re­sults yes­ter­day. —AP

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