Bank of America Corp lowered its annual net interest income guidance on Wednesda...
- Bank of America Corp lowered its annual net interest income guidance on Wednesday to reflect a weakened interest rate environment as the second-largest U.S. lender reported higher-than expected earnings fueled by strong consumer trends.
Net interest income, the difference between interest earned from lending and how much the bank pays for deposits, rose 6% last year. “When long-term interest rates fall, we see more people pay off their mortgages and that translates into more mortgage-backed securities being redeemed and that forces us to write off some premiums,” he said. “I don’t think you can extrapolate that into the future because long-term rates have stabilized at this point.”
But warning signs also emerged with JPMorgan, Citigroup and Well Fargo reporting a dip in margins, stoking fears that interest rate cuts could further pressure profit by narrowing the spread between what banks charge on loans and pay on deposits. Expenses during the quarter were up slightly as the bank invested more in its consumer, commercial and wealth management businesses.
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