Bank of America Corporation (NYSE: BAC) reports that its earnings for the second quarter have surpassed expectations, primarily due to a rise in its number of customers and the positive impact of increased interest rates.
Despite the positive results, the Bank of America has decided to increase its provision for credit losses by $602 million, bringing the total to $1.1 billion. This adjustment is necessary to address the potential impact of higher rates on customers.
The bank reported an 11% increase in revenue, net of interest expense, compared to the previous year, reaching a total of $25.2 billion. Net income also saw a surge of 19% to $7.4 billion. Earnings per share have increased by 21% to $0.88, surpassing the average estimate of $0.84 predicted by 11 analysts, as reported by Zacks Investment Research.
Brian Moynihan, the Bank of America chair and CEO, expressed pride in the bank’s performance, stating, “We delivered one of the strongest quarters and first-half net income periods in the company’s history.”
Moynihan further highlighted the positive impact of organic client growth, increased client activity, and higher interest rates, all of which contributed to the 11% revenue increase.
In addition, the bank acknowledged the overall healthiness of the US economy, albeit with a slower growth rate, supported by a resilient job market.
Earlier this month, Bank of America joined other major US banks in signaling an increase in its dividend after successfully 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 in the third quarter of this year.
Shares of Bank of America (BAC) traded 0.8% higher at $29.62 in the pre-market trading Tuesday.