NEW YORK (AP) — Bank of America said its first-quarter profits fell 18%, as the bank dealt with rising expenses due to the impact of higher interest rates. But the results beat analysts' estimates.
The Charlotte, North Carolina-based bank posted a profit of $6.67 billion, or 76 cents per share, compared with $8.2 billion, or 94 cents a share, in the same period a year earlier. BofA had to make a one-time $700 million payment to the Federal Deposit Insurance Corp. to help the agency replenish the deposit insurance fund.
Excluding that one-time charge, the bank earned 83 cents per share.
Bank of America has been dealing with the effects of higher interest rates on its loan and investment portfolio for the past year. The bank bought a sizable number of bonds during the pandemic when rates were low, and those bonds have lost value as interest rates have risen.
The bank is also paying more on deposits, which has caused its profits to be squeezed slightly. The bank's net interest yield, which is a measure of how much the bank is earning on the loans it has versus the interest it needs to pay out to depositors, dropped from 2.20% in 2023 to 1.99% in 2024.
In BofA's consumer banking division, its largest by revenue and profits, revenue fell by 5% to $10.2 billion. While the bank said it saw consumers open more accounts and spend more on their credit and debit cards, the bank had to set aside more funds to cover potential loans and charged off credit cards.
Investment banking revenues were mostly flat, but the bank saw modest growth in investment banking fees and trading revenues in the quarter.