Bank of America profit jumps on boost from interest income, investment banking

Bank of America's profit rose nearly 20% in the second quarter as it earned more from customers' loan payments, while its investment banking business fared better than expected.

The bank reported a 7% rise in investment banking fees to $1.2 billion. That contrasts with peers whose earnings suffered from a dealmaking drought that has persisted for months.

Some industry executives held out hope, saying they had seen early signs of recovery in parts of those businesses.

JPMorgan Chase's chief financial officer, Jeremy Barnum, highlighted "green shoots" in trading and investment banking in the bank's earnings last week, but said it was too early to call a trend.

Bank of America shares rose nearly 1% in premarket trading after the results. The stock is down more than 11% so far this year, through the previous close.

The lender, alongside rivals JPMorgan Chase and Wells Fargo, earned a windfall from charging clients higher interest rates as the Federal Reserve raised borrowing costs to rein in stubborn inflation.

Bank of America's net interest income (NII) rose 14% to $14.2 billion in the second quarter.

"We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market," CEO Brian Moynihan said in a statement, echoing comments from his peers

The financial health of consumers underpins Bank of America's consumer banking unit, whose revenue rose 15% to $10.5 billion.

However, banks are grappling with stress in their commercial real estate lending businesses, particularly office loan portfolios, which are taking a hit from higher financing costs and a permanent shift towards remote work.

To account for a gloomy backdrop, provision for credit losses rose $602 million to $1.1 billion in the quarter.

Deposits at U.S. banks have become a focus for analysts and investors in recent months after regional bank failures in March prompted the biggest bout of banking turmoil since the 2008 financial crisis.

Average deposit balances fell $18 billion, or 1%, from the prior quarter to $1.9 trillion.

Net income applicable to common shareholders rose to $7.10 billion, or 88 cents per diluted share, for the three months ended June 30, compared with $5.93 billion, or 73 cents per diluted share, a year earlier, the second-largest U.S. bank reported on Tuesday.