The numbers
Bank of America reported a profit of $7.4 billion last quarter, up nearly 20 percent from a year earlier.
Revenue grew more than 10 percent, to $25.2 billion in the second quarter.
Bank of America holds nearly $2 trillion in customer deposits, but like most banks, it is seeing declines as customers move their money to higher-yielding accounts: The average bank deposits fell by about 7 percent in the second quarter, compared to a year ago.
The bank also continued to make progress on a goal it laid out earlier this year: shrinking its head count through attrition. The bank, which had 288,000 employees in 2010, is now down to about 213,000 (excluding summer interns), about 4,000 fewer than a quarter ago. “That sets us up for a good cost trajectory going forward,” said Alastair Borthwick, the bank’s chief financial officer.
Takeaways
Brian Moynihan, the bank’s chief executive, called the quarter one of the strongest in the bank’s history.
“We continue to see a healthy US economy growing at a slower pace, with a resilient labor market,” he said. That echoed comments from his counterparts at other big banks, and came as economists debated the possibility of a so-called soft landing, where inflation subsides without major job losses or a significant slowdown in economic growth. Customer spending on credit and debit cards rose 3 percent, to $226 billion, the bank said.
Notably, the lender’s investment-banking business rebounded in the second quarter, after a sharp decline in deal-making chilled the industry. Fees at the investment banking unit rose 7 percent, to $1.2 billion, and its trading income rose 3 percent, to $4.3 billion.
“That was probably the most important highlight of the quarter, in my opinion, in the global banking business,” Mr. Borthwick said. “We have a little pick up in the equity capital markets, and that is a welcome sign for us.”
Context
America’s four largest banks — Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — now reported nearly $30 billion in profits for the second quarter, up more than 30 percent from a year ago.
But large penalties for wrongdoing remain a common cost at the biggest banks. Last week, Bank of America was fined $150 million by two federal regulators for charging its customers improper fees and denying them promised sign-up bonuses. The bank reported $276 million in litigation expenses last quarter, up from $89 million the previous quarter, “driven by settlements reached in consumer regulatory matters.”
Banks are also preparing for a bill for this year’s failures of three regional banks. Bank of America said its expenses in the second half of this year could include a $1.9 billion accrual if the Federal Deposit Insurance Corporation ends an assessment of banks to cover the costs of protecting failed deposits. uninsured bank.
what next
Analysts will be closely watching Wednesday’s results from Goldman Sachs, which is struggling to recover from a disastrous foray into consumer banking. They will also scrutinize smaller banks such as Western Alliance as the lenders’ chiefs try to shake off the effects of this year’s bank failures that have wreaked havoc across the region’s banking sector.
