Bank of America Q2 profit falls 19%, led by low rates
Bank of America has reported 19% decline in its net income for the second quarter of this year, as it continues to struggle with prolonged low interest rate period.
The lender posted a profit of $3.89bn for the April-June quarter compared to $4.8bn in the same quarter a year earlier.
Its revenue also fell to $20.4bn, down 7% from $22bn recorded in the year-ago quarter.
Bank of America chief financial officer Paul Donofrio said: “We increased adjusted net interest income year over year in a difficult rate environment by growing deposits and loans within our risk and customer frameworks. That, coupled with a relentless focus on costs, drove improved operating leverage across all four of our business segments.
“Also, we increased book value per share by 8% and tangible book value per share by 11%, returned nearly $2bn in capital to common shareholders this quarter, and announced plans to return more capital through both share repurchases and dividends over the next four quarters."
In consumer banking segment, the bank witnessed an increase in net income by 3% to $1.7bn due to increased customer activity combined with lower expenses.
Its global wealth and investment services generated a profit of $788bn in the quarter, up 8% compared to the corresponding quarter in 2015.
The bank’s net income from global markets segment increased 42% to $1.1bn from $786m, driven by strong sales and trading revenues and continued expense management.
Its total net charge-offs declined to $985m from $1.1bn.
Bank of America, the second-largest bank in the US by assets, said that it aims to achieve additional $5bn in annual cost cuts by 2018 as part of its plans to offset the impact of low interest rates.
The bank has already cut about 6,000 jobs over the past 12 months.
Bank of America chief executive Brian Moynihan was quoted by The Wall Street Journal as saying: “We’re down 2,600 people quarter over quarter.
“It’s a constant reduction in personnel through hard work and automation.”
Image: The Bank of America Tower in New York City. Photo courtesy of User Jleon/Wikipedia.