Bank of America posts strong profit rise on cost cuts, tax gains

Bank of America’s profit rose by a third in the second quarter as the bank kept a tight grip on costs and benefited from tax cuts.

Net income in the three months to the end of June rose 33% to $6.8bn (£5.1bn). Revenue fell 1% to $22.6bn though excluding an exceptional item a year earlier revenue rose 3%. Non-interest expenses fell 5% to $13.3bn, or 3% excluding a one-off item the year before.

Following President Trump’s Tax Act, which reduced corporate taxes, Bank of America’s second-quarter tax bill fell to $1.7bn from $3bn.

Earnings per share of 63 cents a share beat the 57 cent average analyst estimate compiled by Bloomberg.

Average loan balances rose by $45bn to $872bn and average deposit balances rose $44bn to $1.3trn. Net interest income rose $664m to $11.7bn, reflecting loan and deposit growth and gains from higher interest rates, the bank said.

The biggest profit gain was at the consumer banking business, the bank’s biggest division, where net income rose 42% to $2.9bn. Profit increased 20% in wealth management, 16% in global banking and 34% in global markets.

Brian Moynihan, Bank of America’s chief executive, said: “Solid operating leverage and client activity drove earnings higher this quarter. Responsible growth continued to deliver as a driver for every area of the company.”

Moynihan has been cutting costs in an effort to improve profitability. Earnings at the consumer business hit an eight-year high as US consumers, buoyed by a growing economy some say is heading for a fall, borrowed to spend.