December 2, 2022

Bank of America’s Earnings Suggest U.S. Consumers Remain Strong and Active

2 min read

Loan and deposit growth at the nation’s second-largest bank suggest that a possible global economic slowdown has not yet hurt many Americans.

If there are signs of an impending recession in the United States, they are hard to find in Bank of America’s quarterly earnings report released on Monday.

The second-largest bank in the country earned $7.1 billion in profit in the third quarter, an 8 percent drop from a year earlier but more than analysts were expecting. Consumer deposits grew 1 percent, and credit card spending rose 13 percent.

The bank’s chief financial officer, Alastair Borthwick, said its retail customers appeared to be in great shape.

“Overall, consumers remain resilient and they continue to spend at an elevated pace,” Mr. Borthwick said in a call with reporters on Monday. “They’re paying down their loan balances at elevated rates with continued ability to borrow.”

The only hint that a change could be coming, he said, was a slight drop in the rate of growth in consumer spending, to 9 percent from 12 percent earlier in the year.

The bank added $378 million to the pool of funds it has set aside to cover future loan losses, but Mr. Borthwick said even that was a good sign — it reflected an increase in lending by the bank rather than a deterioration in the quality of the loans already on its books.

On Wall Street, Bank of America’s sales and trading revenue rose 13 percent, with revenue from trading bonds, commodities and other financial interests up 27 percent from the same period last year, while revenue from trading stocks fell 4 percent.

Revenues from investment banking fees fell 46 percent. But the bank took in 44 percent more in its business providing global transaction services to large companies, and its loan and lease balances among large corporate clients rose 18 percent.

Mr. Borthwick said the bank had seen some of its multinational customers hurt by the “negative impact of valuations on foreign currencies.”

Bank of America’s shares rose nearly 5 percent in early trading on Monday. Its earnings echoed the reports from Citigroup, JPMorgan and Wells Fargo last week, which showed the lenders preparing for a potential slowdown but reporting mostly resilient results as consumers continued to spend.