Bank of America profit more than doubles on reserve release boost
The bank released $2.7B from its reserves
Bank of America Corp reported a jump in first-quarter profit that breezed past estimates on Thursday as it released reserves it had set aside to cover potential coronavirus loan losses.
The bank released $2.7 billion from its reserves, betting on a swift economic recovery as more people get vaccinated and businesses return to normal.
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The second-largest U.S. bank by assets also reported a 12% fall in consumer banking revenue to $8.1 billion in the quarter ended March.
Appetite for new loans waned during the pandemic as customers spent less and saved more and large companies relied on capital markets for funds rather than their bank.
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The economy, however, is poised to log its best performance in 37 years, thanks to the White House's massive $1.9 trillion pandemic relief package and increased vaccinations against the coronavirus.
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"While low interest rates continued to challenge revenue, credit costs improved and we believe that progress in the health crisis and the economy point to an accelerating recovery," Brian Moynihan, the bank's chairman and chief executive, said in a statement.
Net income applicable to common shareholders rose to $7.56 billion, or 86 cents per share, from $3.54 billion, or 40 cents per share, a year earlier.
Analysts on average had expected a profit of 66 cents per share, according to the IBES estimate from Refinitiv.
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(Reporting by Noor Zainab Hussain in Bengaluru and Elizabeth Dilts Marshall is New York; Editing by Saumyadeb Chakrabarty)