After releasing reserves that it had set aside during the height of the pandemic last year, Bank of America has experienced a 173% surge in second-quarter profit. In contrast with this good news, Bank of America has also incurred a spike in expenses as well as flagging revenues.
In terms of net income applicable to common shareholders, Bank of America’s net income currently stands at $8.96 billion, or $1.03 per share; a stark increase from the $3.28 billion, or 37 cents per share that the bank attained a year earlier. This is a sharp increase in the profit of 77 cents per share that analysts projected for the bank.
Bank of America’s decline in profit last year was strongly attributed to the federal government’s decision to introduce extremely low interest rates as the pandemic-induced recession hit its peak. This had an adverse effect on the bank’s profits, especially since BoA’s profits are derived from the difference between what they earn on loans and what they pay out in deposits.
While the effects of such low interest rates continue to curb Bank of America’s revenue generation, the bank does have some room for growth thanks to consistent job creation and an effective vaccination campaign that is improving economic conditions in the United States.
