BAC Bank of America Corporation

By Rachel Louise Ensign 

Bank of America Corp.'s first-quarter profit rose as a healthy U.S. economy led to a strong performance in its massive consumer business.

Quarterly profit at the Charlotte, N.C.-based bank, the second largest in the U.S. by assets, was $7.31 billion, compared with $6.92 billion a year earlier. Per share, earnings were 70 cents. Analysts polled by Refinitiv had expected 66 cents a share.

First-quarter revenue was $23 billion, roughly flat from $23.07 billion a year ago, the bank said Tuesday.

Profit rose 25% in the bank's consumer business due to higher interest rates, deposit and loan growth. Profit climbed 14% in its wealth-management unit, which added new clients in the quarter. Global banking profits rose slightly, though investment-banking revenue fell nearly 7% in the first quarter from a year earlier.

"It's a good economy," Chief Financial Officer Paul Donofrio said on a conference call with analysts.

But uncertainty around the outlook for interest rates this year has clouded the outlook for big banks.

Three years of rate increases have allowed banks to charge borrowers more without significantly increasing what they pay depositors. That era may be coming to an end. The Federal Reserve in March opted to keep interest rates steady and indicated it was unlikely to raise them at all this year. Investors are increasingly betting that the Fed will lower rates by January.

Bank of America shares fell more than 2% in morning trading.

Net interest income rose 5% from a year earlier but fell 1% from the prior quarter. Executives said they expected the metric to rise about 3% in 2019, helped by loan and deposit growth.

Last week, JPMorgan Chase & Co. stood by its guidance that net interest income will rise in 2019. Wells Fargo & Co., which is still dealing with the fallout from its fake-account scandal, lowered its projections for 2019.

In the first quarter, Bank of America managed to keep a lid on interest-rate increases to depositors. It paid 0.73% on U.S. interest-bearing deposits in the first quarter, compared with 0.63% in the fourth quarter.

Loans at Bank of America grew 1% from a year earlier, while deposits were up 4% over that period. Expenses were down more than 4%.

Bank of America, like other big banks, felt the effects of quiet markets in the first quarter. Trading revenue fell 13%.

Write to Rachel Louise Ensign at rachel.ensign@wsj.com

(END) Dow Jones Newswires

April 16, 2019 11:38 ET (15:38 GMT)

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