Bank of America Quarterly result:
In the first quarter, Bank of America experienced a decrease in profit as its consumer division weakened and it wrote off more loans, especially in the credit card sector.
BofA, along with other major lenders like JPMorgan, is assessing the possibility of interest rate cuts by the US Federal Reserve this year. While such a move might reduce banks’ income from interest payments, it could also stimulate economic activity and borrower demand.
BofA saw its net interest income, which represents the difference between its earnings from loans and the costs of deposits, decrease by 3% to $14 billion in the quarter, primarily due to higher deposit expenses and modest loan growth.
Banking executives noted last week that an uncertain economic outlook and evolving expectations regarding US interest rate cuts have increased the difficulty of forecasting future profits.
If the Federal Reserve opts to maintain higher rates for an extended period in the coming months, banks that profited significantly from rising interest rates in the past two years could see further gains. However, their earnings might diminish if a potential economic slowdown discourages borrowers from seeking loans.
The second-largest US lender recorded a profit of $6.7 billion, or 76 cents per share, for the quarter ending on March 31, down from $8.2 billion, or 94 cents per share, in the same period a year earlier. While revenue in Bank of America’s investment banking and wealth management divisions increased, it only partially offset the decline in interest income.
