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Consumer Lending Boosts Bank of America’s 1Q Earnings

David Krechevsky
Apr 18, 2022
Bank of America

Net earnings down 13% YOY, better than other major banks.

Bank of America, the nation’s second-largest bank by assets, reported a better first quarter of 2022 than its peers thanks in part to improved consumer lending.

BofA reported net earnings of $7.1 billion, or 80 cents per diluted share, topping the 75 cents per share forecast by analysts surveyed by FactSet. Revenue totaled $23.2 billion, just above estimates of $23.1 billion.

Earnings were down 13% in the quarter from a year earlier, far better than results posted by JPMorgan Chase (down 42%) and Wells Fargo (21%).

The better-than-expected results for BofA was due in part to a $8.8 billion in consumer banking revenue, up 9% from the same quarter last year. Average loans and leases grew $22 billion, or 12%, to $211 billion, driven by securities-based lending, residential mortgage lending, and custom lending, the bank said.

Net interest income rose $1.4 billion, or 13%, to $11.6 billion, driven by strong deposit growth and investment of excess liquidity, loan growth, and benefits from higher long-end interest rates, the bank said.

Total investment banking fees, however,  plunged 35% to $1.5 billion in the quarter. Large investments financial institutions have been adversely affected by the war in Ukraine, and BofA was no exception: It reported a provision of $165 million for credit losses, mostly related to setting aside reserves for its exposure to Russia and a growth in loans, the bank said.

“We achieved solid first-quarter results earning $7.1 billion, continuing the momentum from record net income in 2021,” Chairman & CEO Brian Moynihan said. “Across our businesses, ongoing organic growth combined with good expense management drove operating leverage for the third consecutive quarter. Year over year, we grew loans $70 billion and deposits by $240 billion. Our teammates supported our clients while managing through the impacts of the pandemic, war in Ukraine, and an evolving rate environment.”

Chief Financial Officer Alastair Borthwick said the first-quarter results were strong, “despite challenging markets and volatility, which we believe reflect the value of our Responsible Growth strategy. Net interest income increased by $1.4 billion versus the year-ago quarter, supported by strong loan and deposit growth. Going forward, and with the forward curve expectation of rising interest rates, we anticipate realizing more of the benefit of our deposit franchise.”

Following the release of its quarterly earnings, BofA’s stock was up about 2% in trading this morning on the New York Stock Exchange.

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