Financial institution of America posted a 12% decline in first-quarter earnings from a yr earlier, a drop that was a lot smaller than those its rivals had reported the earlier week.
The Charlotte, North Carolina-based financial institution stated it earned $7.1 billion in revenue in comparison with $8 billion throughout the identical interval a yr earlier. Different huge Wall Road financial institution reported fallen earnings this quarter, however BofA's outcomes have been helped by the truth that it holds solely a modest quantity of Russian property.
"This isn't a foul consequence for Financial institution of America, significantly the continued stable mortgage development," stated David Wagner, portfolio supervisor at Aptus Capital Advisors, who owns BofA shares, in an e mail.
BofA's shopper banking division — the financial institution's largest enterprise by income and earnings — additionally helped enhance outcomes. Web earnings within the division was up 11% from a yr earlier, helped by increased income from loans and rates of interest. Deposits grew 14% to $1 trillion.
The financial institution did not need to put aside a lot funds this quarter to cowl potential losses as properly, in distinction to JPMorgan Chase and Citigroup, who needed to put aside cash to cowl the chance of a recession in addition to for his or her publicity to Russia. BofA needed to put aside $700 million to cowl its publicity to Russia, in contrast with the $1.9 billion Citigroup put aside.
Banks solely reserve funds for losses after they assume that default charges, that are presently low, will begin to rise. And JPMorgan admitted to such through the name, saying it was a "preemptive transfer" if the financial system slowed.
Financial institution of America plans to reduce the overdraft charges it fees clients to $10 from $35 beginning in Might. It can additionally cease charging charges for non-sufficient funds, that are levied when it rejects a transaction — higher identified to customers as bouncing a examine. Whereas checks are now not broadly used, NSF charges can come from automated funds like utility payments.
Financial institution of America has stated roughly 25% of its overdraft/NSF price income yearly comes from NSF charges. Altogether, Financial institution of America estimates the step will reduce its overdraft-fee revenues by 97% from the place they have been in 2009 — the yr earlier than it began taking incremental steps towards reining in overdraft-fee revenues.
"That is the ultimate step within the journey we have been on," stated Holly O'Neill, president of retail banking at BofA, stated in January. "We've good monetary options for shoppers with out them having to depend on overdraft, however we'll nonetheless have overdraft whether it is wanted."
Like different banks, BofA noticed a drop in funding banking revenues and charges within the quarter as companies avoided deal-making.
BofA's inventory value rose 3% throughout Monday morning buying and selling to almost $39 a share.