Bank of America Corp (NYSE:BAC) has posted second-quarter earnings that beat estimates as it grew its customer base and benefitted from higher interest rates.
However, the Charlotte, North Carolina-based lender has also increased its provision for credit losses by $602 million to $1.1 billion due to the impact the higher rates will have on customers.
The bank reported an 11% year-over-year rise in revenue, net of interest expense, to $25.2 billion and a 19% increase in net income to $7.4 billion for the three months ended June 30, 2023. Earnings per share rose 21% to $0.88, ahead of the $0.84 consensus estimate of 11 analysts following the stock, according to Zacks Investment Research.
It claimed market-share gains in its Sales and Trading and Investment Banking businesses.
“We delivered one of the strongest quarters and first-half net income periods in the company’s history,” chair and CEO Brian Moynihan said in a statement.
“Continued organic client growth and client activity across our businesses complemented beneficial impacts of higher interest rates and produced an 11% increase in revenue.”
The bank noted that the US economy remains healthy, although growing at a slower pace, with a resilient jobs market.
Earlier this month, it became the latest 'big' US bank to signal an increase in its dividend after passing the Federal Reserve's stress tests. It plans to raise its quarterly dividend by 9.1% to $0.24 per share from $0.22, starting from the third quarter of this year.
Its shares traded 0.8% higher at $29.62 ahead of the market open.
Contact the author at stephen.gunnion@proactiveinvestors.com