Bank of America Corp.
BAC 7.04%
said Monday that its second-quarter profit declined 32%.
The second-largest U.S. bank earned $6.2 billion, down from $9.2 billion a year earlier. Per-share earnings of 73 cents missed the 75 cents that analysts polled by FactSet had expected.
Revenue increased 6% from a year ago to $22.7 billion, slightly below analysts’ expectations.
Last week,
JPMorgan Chase
JPM 4.58%
& Co.,
Citigroup Inc.,
Wells Fargo & Co. and
Morgan Stanley
all reported double-digit drops in profit. Executives at the country’s largest banks said there is more uncertainty than usual about where the economy is headed.
Bank of America released $48 million in funds it had set aside to cover potential future losses. A year ago, the bank released $2.2 billion, lifting its profits at the time.
Some bank executives believe a recession is on the horizon, and that the Federal Reserve’s attempts to curb inflation with interest-rate increases could help spark the downturn. Investors are watching bank earnings closely because they are viewed as a bellwether for the broader economy.
The Federal Reserve has been raising interest rates this year, including two big increases in the second quarter. Higher rates allow banks to charge more on loans, which can juice profits. The resulting market gyrations have also helped banks’ trading desks, which benefit from volatility.
Bank of America’s net interest income, including its lending profits, rose 22% from a year earlier to $12.4 billion, thanks largely to higher rates and stronger demand for loans.
Noninterest income, which includes fees, fell 9% from a year earlier to $10.2 billion. Lower investment-banking fees and changes to the bank’s overdraft policy dragged down fee income, Bank of America said. The bank said in January it would cut overdraft fees from $35 to $10.
Investment banking fees fell 46% from a year earlier to $1.2 billion. Investment banking revenue fell 54% at JPMorgan, 55% at Morgan Stanley and 46% at Citigroup in the second quarter.
Adjusted trading revenue increased 11% to about $4 billion.
Outstanding loans and leases grew 12% from a year earlier to just over $1 trillion. Loans in the bank’s commercial division rose 16%, while loans to consumers increased 7%. That is positive news for a bank that, like its peers, struggled to profit from lending for much of the pandemic because of rock-bottom interest rates and tepid loan demand.
Bank of America’s total expenses increased 1.5% to $15.3 billion.
Shares fell slightly in premarket trading.
Write to Orla McCaffrey at orla.mccaffrey@wsj.com
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