Bank Of America Beats Profit Estimates On Strong Consumer Lending

Bank of America Corp has reported a smaller-than-expected 13% fall in first-quarter profit.

BoFA was propped by strong growth in its consumer lending business, weathering the blow from a slowdown in global deal-making.

The bank reported a 9% rise in consumer banking revenue to $8.8 billion in the quarter ended March.

However, total investment banking fees plunged 35% to $1.5 billion in the quarter.

This year, investment banking businesses have taken a hit as geopolitical turmoil fueled by Russia’s invasion of Ukraine slammed the brakes on last year’s breakneck pace of deal-making and a boom in the IPO market.

Bank of America’s global banking segment, which houses the investment banking business, reported $165 million of provisions for credit losses, primarily because it built reserves tied to its exposure to Russia and a growth in loans.

The second-largest U.S. bank by assets released $362 million from its reserves it had set aside for bad loans.

Net interest income, a key measure of how much the bank can make from lending, rose 13% to $11.6 billion in the quarter.

Because of the composition of its balance sheet, Bank of America is most sensitive among large U.S. banks to changes in interest rates and is expected to benefit from the U.S. Federal Reserve’s aggressive plan to raise interest rates.

Profit applicable to common shareholders fell nearly 13% to $6.6 billion, or 80 cents per share, for the quarter ended March 31 from $7.56 billion, or 86 cents per share, a year earlier.

The bank reported an 8% rise in pre-tax, pre-provision earnings, which strip out reserves.

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