Bank Of America Profit Increases Despite Low-Interest Rates – – Daily Cryptocurrency and FX News

Bank of America sign Knoxville, TN, USA

Bank of America Corp’s Q2 2021 earnings almost tripled as the institution released loss reserves that it had set aside in 2021. However, its mainstay lending business took a major hit from the low-interest rates that were set in place to revive a pandemic-hit economy.

The second-biggest bank in the United States by assets unloaded up to $2.2 billion of reserves in the quarter, representing an upbeat economic outlook as increasing rates of vaccinations resulted in the easing of pandemic restrictions and set the stage for a significant economic recovery.

Nonetheless, rock-bottom interest rates to fight the economic fallout of the pandemic continued to erode the bank’s net interest income (NII). NII is a measure of how much the lenders can make on the difference between what they earn from the loans and pay out on deposits.

NII lost 6% in the quarter to $10.2 billion, sending the institution’s shares down 2% in the premarket trading session. The United States Federal Reserve, nonetheless, has started discussions on tapering easy money policies from 2021. Fed policymakers brought forward their projections for raising interest rates to 2023 from 2024.

The average loans and leases throughout all segments were down by 11% from 2021, but up $1.8 billion from the previous quarter, which indicates a nascent recovery is happening in the market. Excluding the loans that are related to the US government’s paycheck protection program, loans balances gained $5.1 billion from the first quarter.

Chief Executive Officer Brian Moynihan said in an official statement:

“Consumer spending has significantly surpassed pre-pandemic levels, deposit growth is strong, and loan levels have begun to grow.”

Major momentum in job growth and vaccination rollout against coronavirus have underpinned a recovery in the wider economy. Nonetheless, Wall Street’s largest banks are still anticipated to feel the pinch from the low rates.

Executives at JPMorgan Chase warned on July 13 that the positive outlook for the US economy might not make for blockbuster revenues in the near term as a result of low-interest rates, weak loan demand, and a slowdown in trading.

The general revenue, net of interest expense, plunged by 4% to $21.5 billion.

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