Bank of America on Wednesday reported profit of $9.22 billion for the quarter ending June 30, a 161% increase from $3.53 billion the bank reported last year. The Charlotte, N.C.-based bank’s profits were buoyed by a $2.2 billion release of its loan loss reserves, as the bank anticipates an economic rebound from the COVID-19 pandemic. The bank said its loan loss reserves remain at $7.43 billion.
- "Despite the continued challenge of low interest rates, the diversity and leadership positions of our eight lines of business enabled us to benefit from a faster economic recovery this quarter," Bank of America CFO Paul Donofrio said in a statement. "We believe our continued focus on client selection and responsible growth has positioned us well."
Revenue for the quarter decreased 4% to $21.47 billion, compared with $22.33 billion from Q2 2020, a drop the bank attributed to the low interest rate environment.
Bank of America’s average loans and leases were down 11% from last year. Despite the drop, the bank said it is beginning to see its loan levels pick up. "Consumer spending has significantly surpassed pre-pandemic levels, deposit growth is strong, and loan levels have begun to grow," CEO Brian Moynihan said.
While down from a year ago, the bank’s loans and leases totaled $918.93 billion during Q2, a 2% increase from $903.09 billion in the previous quarter. Donofrio said the bank’s total loan balances grew for the first time since the first quarter of 2020, "even as we recorded the lowest credit loss rates in 25 years."
A decrease in investment banking fees also affected Bank of America’s revenue for the quarter. Record trading volume, which boosted many banks' earnings during the past few months, has returned to pre-pandemic levels. The bank saw a 19% drop in trading revenue during 2021's spring months.
As the bank anticipates a return to a more normal business environment in the second half of the year, it will focus on process improvements that allow it to reduce its headcount and continue to fund franchise investments, Moynihan told analysts Wednesday.
"Our headcount in the second quarter, excluding summer interns, declined by roughly 2,500, or over 1% in the first quarter," he said. The bank, which pledged last year it wouldn't lay off employees during the pandemic, said it is relying on natural attrition to lower its headcount.
Additionally, all vaccinated employees are permitted return to the office, Donofrio told analysts Wednesday, and said the goal is to have all workers back in-person by early September. After that, the focus will shift to bringing unvaccinated employees back. The bank employs over 200,000 people total.
The bank intends to gradually transition back to in-person work over the coming months, a spokesperson told The Charlotte Observer.
For its digital banking services, the bank reported 40.5 million digital users in Q2, up 1.2 million customers year-over-year.
The bank said 70% of its consumer households use some part of its digital platform, and the bank reached 2.6 billion logins from customers in the past 90 days. Digital sales were up 26% during the quarter, compared to the same quarter last year, and the bank said 85% of mortgages in the quarter were done digitally.