Bank of America on Tuesday reported that second-quarter earnings rose 10% as revenue from its consumer banking unit was boosted by strong demand for loans amid low interest rates.
CEO Brian Moynihan and CFO Paul Donofrio both described the quarter as one of the best in the bank’s history, with Moynihan referring to the performance of retail banking — which posted a record $2 billion in quarterly profit — as a “milestone.”
“Against modest economic growth of 2 percent, we had one of the strongest quarters in our history,” Moynihan said in a news release. “All of our businesses delivered strong results, with several setting new records.”
Overall, BofA’s net income totaled $4.9 billion, compared with $4.4 billion a year ago, while earnings per share of 46 cents beat analysts’ estimates of 43 cents. Total revenue of $23.07 billion also beat the average analyst estimate of $21.78 billion.
Consumer banking revenue rose 9% to $8.5 billion and net income was up 21%, with deposits rising $56.3 billion to $652.8 billion and loans increasing by $18.6 billion, or 8%.
As USA Today reports, the unit’s performance reflects “the robust job market and consumers’ healthy appetite for loans amid low interest rates.” It has also benefited from cost cuts as well as improved technology, growth in deposits and a focus on higher-quality borrowers.
In the second quarter, Reuters noted, the division managed to increase deposits at a lower cost and use those cheaper funds to fuel loan growth, helping it to record a higher profit than any other unit.
Bank of America also hit its “efficiency ratio” target of spending 60 cents for every dollar of revenue it produces, down from 63 cents a year earlier. “Investors have been watching that metric closely as a sign of how efficiently the bank is run,” Reuters said.
Net interest income fell short of expectations, rising 8.6% to $10.99 billion during the second quarter. But according to Evercore ISI analyst Glenn Schorr, “This was a good quarter all around for BofA. You really have to look hard to find a few issues to talk about.”