Bank of America has always benefitted from rising interest rates, and as a rebound in loans, growth has boosted income. However, bank stocks have been butchered this year amid concerns that high inflation will spark a recession, which would lead to higher loan defaults.
Noninterest expenses in the quarter gained 2% from a year earlier, as the firm cited about $425 million in costs tied to regulatory matters. Last week, U.S. regulators announced charges against the lender totaling $225 million over how it handled unemployment benefits during the pandemic.
Bank of America shares have lost 28% this year through Friday, worse than the 16% decline of the KBW Bank Index.
Last week, JPMorgan and Wells Fargo posted second-quarter profit declines as the banks set aside more funds for expected loan losses, while Morgan Stanley was disappointed after a bigger-than-expected slowdown in investment banking. Citigroup topped expectations for revenue as it benefited from rising rates and strong trading results.
