(Reuters) – Bank of America Corp’s profit rose in the first quarter as it earned more from customers’ interest payments while the Federal Reserve raised borrowing costs.
Rival banking giants JPMorgan Chase and Co and Citigroup Inc also reaped windfalls from higher interest payments in the first quarter, while setting aside billions of dollars to prepare for a worsening economy.
“Results were strong despite a challenging economic environment with market and banking sector volatility,” Bank of America Chief Financial Officer Alastair Borthwick said on Tuesday.
The company’s shares were up 3% in premarket trading following the results.
The collapse of two U.S. lenders in March shook the industry and exacerbated concerns about a looming recession. The crisis battered bank stocks and prompted spooked depositors to move their cash to larger institutions.
Deposits at BofA fell 2% to $1.05 trillion in the first quarter, compared with the fourth quarter.
The company’s investment banking fees fell 20% to $1.2 billion.
Traders in fixed income, currencies and commodities stayed in high demand, bringing in $3.5 billion in revenue for BofA, up 27% from a year earlier.
Bank of America’s net interest income, which reflects how much money the bank makes from charging interest to customers, rose 25% to $14.4 billion in the quarter.
The banking industry was rocked by the failures of two U.S. lenders in March. The collapses battered bank stocks and prompted spooked depositors to move their cash to larger institutions.
The company’s net income applicable to common shareholders rose to $7.66 billion, or 94 cents per share, for the three months ended March 31, the second-largest U.S. lender reported on Tuesday. That compares with $6.6 billion, or 80 cents per share, a year earlier.
(Reporting by Manya Saini and Niket Nishant in Bengaluru and Saeed Azhar in New York; Additional reporting by Siddarth S; Editing by Lananh Nguyen and Shounak Dasgupta)
