Bank of Amer­ica prof­its in­crease to record $6.9B

Austin American-Statesman - - BUSINESS - By Ken Sweet

Bank of Amer­ica’s prof­its rose to a record $6.9 bil­lion last quar­ter thanks in part to the new tax law and higher in­ter­est rates.

The con­sumer bank­ing giant earned $6.92 bil­lion, or 62 cents per share, up from $5.34 bil­lion, or 45 cents a share, from the same pe­riod a year ago. An­a­lysts had been ex­pect­ing a per-share profit of 59 cents, ac­cord­ing to Fact­Set.

Like its com­peti­tors JP­Mor­gan Chase and Cit­i­group, Bank of Amer­ica re­ported a sharp drop in its tax bill Mon­day, which helped boost prof­its. While the bank’s pre­tax in­come rose by roughly $1 bil­lion, the amount it paid in taxes fell by roughly $500 mil­lion in the quar­ter. The Char­lotte, N.C., bank es­ti­mates that the tax law cut its ef­fec­tive tax rate by 9 per­cent­age points.

This first-quar­ter earn­ings sea­son will give in­vestors and the pub­lic their first good look into how Pres­i­dent Don­ald Trump’s tax law is im­pact­ing cor­po­rate Amer­ica. Banks are among the first to re­port re­sults at the be­gin­ning of each quar­ter.

Higher i nter­est rates ben­e­fited the bank as well. The Fed­eral Re­serve has steadily raised in­ter­est rates, al­low­ing banks to charge cus­tomers more to bor­row. In Bank of Amer­ica’s con­sumer bank­ing divi­sion, its largest busi­ness by rev­enue and profit, net in­ter­est in­come rose 13 per­cent from a year ear­lier. The bank also grew loans and de­posits in the quar­ter.

While higher i nter­est rates should trans­late into bet­ter in­ter­est rates for savers, most of the ben­e­fits have gone to the banks, not ac­count hold­ers.

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