BofA profits fall as bank sets aside money for downturn

Oct 17, 2022, 5:00 AM | Updated: 5:08 am
The Bank of America logo is seen on a branch office, Oct. 14, 2022, in Boston. Bank of America’s ...

The Bank of America logo is seen on a branch office, Oct. 14, 2022, in Boston. Bank of America’s profits fell by 8% in the third quarter as the bank set aside cash to cover potential loan losses. It’s the latest bank to start socking away money for a potential recession, as Wall Street’s biggest banks have become increasingly gloomy on the U.S. economy going into the winter. (AP Photo/Michael Dwyer)

(AP Photo/Michael Dwyer)

NEW YORK (AP) — Bank of America’s profits fell by 8% in the third quarter as the bank set aside cash to cover potential loan losses. It’s the latest bank to start socking away money for a potential recession, as Wall Street’s biggest banks have become increasingly gloomy on the U.S. economy going into the winter.

The nation’s second-largest bank said it earned $7.08 billion last quarter, or 81 cents a share, compared to a profit of $7.69 billion, or 86 cents a share, in the same period a year earlier. The results were better than Wall Street forecasts, who were looking for BofA to earn 78 cents a share, according to FactSet.

BofA put $378 million into its loan-loss reserves this quarter — a similar level to Citigroup and Wells Fargo. These reserves are designed to cushion banks against potential bad loans when economies turn downward. During the pandemic, banks set aside tens of billions of dollars into these reserves, only to release them a year later when economic activity picked up again.

JPMorgan, the nation’s largest bank, set aside roughly a $1 billion in its loan loss reserves last week, while Citigroup and Wells both roughly put $400 million into their reserves this quarter.

The bank saw loans grow by a very healthy 12% from a year earlier, which the bank ascribed to businesses taking out loans as well as consumers carrying a credit card balance. Wells Fargo, Citigroup and JPMorgan all reported double-digit increases in consumer credit card spending compared to a year earlier, which has led to worries that consumers are needing to borrow to keep up with inflation.

The bank also is benefiting from higher interest rates. The bank’s net interest income grew by 24% to $13.8 billion in the quarter. BofA’s balance sheet tends to skew more toward short-term interest rates, which means the Fed’s recent sharp rate hikes have a more immediate impact on the bank’s bottom line compared to its competitors.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Rugby star and ALS campaigner Doddie Weir dies at 52

EDINBURGH, Scotland (AP) — Doddie Weir, a former Scotland rugby player whose diagnosis with Lou Gehrig’s disease led to a widely praised campaign for more research into ALS, has died at the age of 52. The Scottish Rugby Union (SRU) announced Weir’s death on Saturday. The lock played 61 times for Scotland and was famed […]
13 hours ago
Jorge Rodriguez, from the Venezuelan government delegation, center, speaks to the media as he arriv...
Associated Press

Venezuela’s gov, opponents resume talks; US eases sanction

MEXICO CITY (AP) — Venezuela’s government and its opposition on Saturday agreed to create a U.N.-managed fund to finance health, food and education programs for the poor, while the Biden administration eased some oil sanctions on the country in an effort to boost the newly restarted talks between the sides. The agreement signed in Mexico […]
13 hours ago
FILE - A Chevron sign is displayed outside one of the company's gas stations in Bradenton, Fla., Fe...
Associated Press

Biden eases Venezuela sanctions as opposition talks resume

WASHINGTON (AP) — The Biden administration on Saturday eased some oil sanctions on Venezuela in an effort to support newly restarted negotiations between President Nicolás Maduro’s government and its opposition. The Treasury Department is allowing Chevron to resume “limited” energy production in Venezuela after years of sanctions that have dramatically curtailed oil and gas profits […]
13 hours ago
FILE - This file booking photo provided by the Delaware Department of Justice shows Barry Croft Jr....
Associated Press

Judge denies bid for new trial in Whitmer kidnapping case

GRAND RAPIDS, Mich. (AP) — A federal judge has denied a new trial request by two men convicted of conspiring to kidnap Michigan’s Democratic Gov. Gretchen Whitmer. Lawyers for Adam Fox and Barry Croft Jr. alleged misconduct by a juror and unfairness by U.S. District Judge Robert Jonker following their conviction by a federal jury […]
13 hours ago
FILE - This photo provided by the Missouri Department of Corrections shows Kevin Johnson.  A federa...
Associated Press

Judge denies 19-year-old’s ask to attend father’s execution

ST. LOUIS (AP) — A federal judge has denied a request from a 19-year-old woman to allow her to watch her father’s death by injection, upholding a Missouri law that bars anyone under 21 from witnessing an execution. Kevin Johnson is set to be executed Tuesday for killing Kirkwood, Missouri, Police Officer William McEntee in […]
13 hours ago
FILE - This March 6, 2014, file photo shows the Waste Isolation Pilot Plant, the nation's only unde...
Associated Press

US nuclear waste repository begins filling new disposal area

ALBUQUERQUE, N.M. (AP) — Workers at the nation’s only underground nuclear waste repository have started using a newly mined disposal area at the underground facility in southern New Mexico. Officials at the Waste Isolation Pilot Plant made the announcement this week, saying the first containers of waste to be entombed in the new area came […]
13 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Prep the plumbing in your home just in time for the holidays

With the holidays approaching, it's important to know when your home is in need of heating and plumbing updates before more guests start to come around.
(Desert Institute for Spine Care photo)...
DESERT INSTITUTE FOR SPINE CARE

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
...
SCHWARTZ LASER EYE CENTER

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
BofA profits fall as bank sets aside money for downturn