(Reuters) – Bank of America’s profit fell on Tuesday as the lender earned less on interest payments to customers.
BofA’s net interest income (NII) (the difference between what it earns on loans and payments on deposits) fell 3% to $14 billion.
An uncertain economic outlook and changing expectations for lower U.S. interest rates have made it difficult to forecast future earnings, bank executives said last week.
If the Federal Reserve keeps rates high longer in the coming months, lenders who have profited hugely from rising interest rates over the past two years will be able to consolidate their gains. But their income could decline if a potential economic downturn deters borrowers from taking out loans.
Bank of America’s investment banking and asset management revenues rose, partially offsetting lower interest payments.
Investment banking fees jumped 35% to $1.6 billion. Last month, chief financial officer Alastair Borthwick said he expected investment banking revenue to rise 10% to 15% in the first quarter from a year earlier.
Revenue from this segment rose at rivals JPMorgan Chase (NYSE:) and Citigroup in the first quarter, helped by growth in the debt and equity capital markets.
Goldman Sachs’ earnings topped forecasts on Monday as underwriting, deals and bond trading lifted earnings per share to their highest level since late 2021.
But industry executives expressed guarded optimism about a nascent recovery in dealmaking, despite a robust U.S. economy, buoyant stocks and a flurry of big deals.
Bank of America also took on $700 million in expenses in the quarter to replenish the government’s deposit insurance fund, which was drained by $16 billion to cover deposits from two banks that failed in 2023.
The second-largest U.S. lender earned profit of $6.7 billion, or 76 cents per share, in the three months ended March 31, compared with $8.2 billion, or 94 cents per share, a year earlier.