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TIME:2024-05-01 11:28:51 Source: Internet compilationEdit:world
Bank of America reported an 18 percent drop in profit for the first quarter of this year, as the com
Bank of America reported an 18 percent drop in profit for the first quarter of this year, as the company set aside more money to cover consumer credit card losses.
The bank said profit fell to $6.67 billion, or 76 cents a share.
Its net charge-offs - or debts that are unlikely to be recovered - rose to $1.5 billion in the first quarter, mainly from credit card losses. This is up from $807 million a year earlier.
US lenders have cited resilient household finances as evidence that the economy remains on a solid footing, but cracks are starting to show for the lowest-income Americans, Reuters reported.
While spending remains robust despite soaring borrowing costs, banks are preparing for more customers to miss payments.
Bank of America reported an 18 percent drop in profit for the first quarter of this year
'The market has used Bank of America as the bellwether for consumer commentary,' David Wagner, a portfolio manager at Aptus Capital Advisors told Reuters.
'The weakness in credit card delinquencies caught them offside.'
Alastair Borthwick, chief financial officer, said the charge-offs are from delinquencies in the fourth quarter of 2023, but are beginning to stabilize.
America's combined household debt shot up by $212 billion to a record $17.5 trillion in the final three months of last year, according to data from the Federal Bank of New York.
Amid the rise in debt, the rate of Americans falling into delinquencies was also up between October and December - and Americans held $1.13 trillion on their credit cards at the end of last year.
A combination of inflation, increased interest rates and the restarting of student loan payments in October has put pressure on household finances.
Interest rates remain at a 23-year high between 5.25 and 5.5 percent, and a hotter-than-expected inflation report last week has lessened investor hopes for a rate cut in the coming months.
Speaking today in Washington DC, Federal Reserve Chairman Jerome Powell said it will take 'longer than expected' to get stubborn inflation down to the central bank's 2 percent target - signaling that it will also likely take longer to decrease rates.
America's combined household debt shot up by $212 billion to a record $17.5 trillion in the fourth quarter of 2023
Speaking today in Washington DC, Federal Reserve Chairman Jerome Powell said it will take 'longer than expected' to get stubborn inflation down to the central bank's 2 percent target
Bank of America shares fell more than 3 percent Tuesday.
The bank's fall in profit included a one-time $700 million charge to pay the Federal Deposit Insurance Corporation over last year's bank failures. Excluding that charge, the bank said it would have earned 83 cents a share.
Revenue slipped 1.6 percent to $25.98 billion as net interest income declined from the year before - while still topping estimates.
Bank of America shares fell more than 3 percent Tuesday
Overall in the consumer bank, revenue sank 5 percent to $10 billion in the quarter, primarily due to lower deposit balances.
Net interest income (NII), which is the difference between what it earns on loans and investments and what it pays customers for their deposits, was $14.19 billion.
According to CNBC, StreetAccount forecasts had put the figure at $13.93 billion.
Meanwhile investment banking revenue at the company soared 35 percent to $1.57 billion, exceeding expectations.
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