Bank of America profits rocket

The second-largest bank in the United States has seen quarterly earnings almost double as it reaps rewards from higher interest rates and an increase in trading.

Bank of America (BofA) has reported a 44 per cent rise in quarterly profit as higher interest rates bulked up earnings from loans and an increase in trading boosted revenue.

The second-largest US bank said net income attributable to shareholders rose to US$4.35 billion in the three months ended March 31 from $3.02bn a year earlier.

Earnings per share rose to 41 cents per share from 28 per share.

Analysts on average had expected earnings of 35 cents per share, according to Reuters. It was not immediately clear if the reported figures were comparable.

Total revenue, net of interest expense, rose 7 per cent to $22.25bn.

“We saw good client activity in our balanced portfolio of businesses … The US economy continues to show consumer and business optimism, and our results reflect that,” said the chief executive Brian Moynihan.

Higher interest rates increased the amount of money banks can earn from their various loans, known as net interest income. BofA made $11.06 billion as net interest income in the quarter, up 5.5 percent from a year earlier.

JP Morgan Chase and Citigroup last week also reported better-than-expected quarterly profit, driven by increased trading activity.

Excluding special items, the bank’s trading activities brought in $4bn, a 21.2 per cent rise.

Revenue from fixed-income trading surged about 29 per cent, while equity trading revenue rose about 7 per cent, boosted by volatility around the Fed’s interest rate hikes.

Bank of America posted record investment banking fees of $1.6bn.

The lender’s non-interest expenses was nearly flat at $14.85m.

* Reuters

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