Bank of America’s profits fell by 8% in the third quarter as the bank set aside cash to cover potential loan losses.
It’s the latest bank to start socking away money for a potential recession, as Wall Street’s biggest banks have become increasingly gloomy on the U.S. economy going into the winter.
NEW YORK — It’s the latest bank to start socking away money for a potential recession, as Wall Street’s biggest banks have become increasingly gloomy on the U.S. economy going into the winter. The nation’s second-largest bank said it earned $7.08 billion last quarter, or 81 cents a share, compared to a profit of $7.69 billion, or 86 cents a share, in the same period a year earlier. The results were better than Wall Street forecasts, who were looking for BofA to earn 78 cents a share, according to FactSet.BofA put $378 million into its loan-loss reserves this quarter — a similar level to Citigroup and Wells Fargo.
JPMorgan, the nation’s largest bank, set aside roughly a $1 billion in its loan loss reserves last week, while Citigroup and Wells both roughly put $400 million into their reserves this quarter.The bank saw loans grow by a very healthy 12% from a year earlier, which the bank ascribed to businesses taking out loans as well as consumers carrying a credit card balance.
The bank also is benefiting from higher interest rates. The bank’s net interest income grew by 24% to $13.8 billion in the quarter. BofA’s balance sheet tends to skew more toward short-term interest rates, which means the Fed’s recent sharp rate hikes have a more immediate impact on the bank’s bottom line compared to its competitors.
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