Bank of America profit falls less than expected on loan and deposit growth

Bank of America Corp. said Monday its quarterly profit fell $1 billion, but the financial giant beat Wall Street profit targets and posted healthy loan growth.

Bank of America shares rose 0.6% in premarket trading after the megabank said first-quarter earnings fell to $7.1 billion, or 80 cents per share, from 8.1 billion, or 86 cents per share in the year-ago quarter.

First-quarter revenue increased to $23.2 billion from $22.8 billion in the year-ago quarter.

Bank of America beat Wall Street targets for earnings of 75 cents a share and revenue of $23.1 billion, according to a FactSet survey.

In a blow to its earnings, Bank of America’s net release of reserves in the first quarter fell to $362 million from $2.7 billion.

The company called its first-quarter results “strong despite challenging markets and volatility,” with net interest income up $1.4 billion, a $70 billion increase in average loan balances to $978 billion and a $240 billion increase in average deposits to $2. trillion.

“Continued organic growth combined with good expense management generated operating leverage for the third consecutive quarter,” said CEO Brian Moynihan. “Our teammates supported our clients while managing the impacts of the pandemic, the war in Ukraine and a changing rate environment.”

Commercial loans rose 16% to $539 billion, while consumer loans rose 4% to $435 billion.

Bank of America shares are down 15.6% so far in 2022, compared to a 7.8% loss for the S&P 500 SPX,
-1.21%
and Financial Select Sector SPDR ETF XLF down 5.5%,
-1.13%.

Bank of America’s earnings come after JPMorgan Chase & Co. JPM,
-0.93%
announced its results on Wednesday, followed by Wells Fargo & Co. WFC,
-4.51%,
Citigroup Inc. C,
+1.56%,
Goldman SachsGS,
-0.10%
and Morgan Stanley MS,
+0.75%
Thursday.

Overall, banks struggled with lower investment banking revenue as transactions dried up in the first quarter, but net interest income rose as interest rates rose .

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