Bank of America is the latest of the big U.S. financial institutions to release strong earnings figures, after Citigroup and Goldman Sachs earlier this week.
JPMorganChase and Wells Fargo reported last week.
On Wednesday, Bank of America said its second-quarter profits soared 70 per cent to $3.6 billion US, up from $2.1 billion last year. That amounted to 32 cents a share, well ahead of analysts estimates.
Banks' 2nd quarter profits
- Bank of America: $3.6B, 32 cents/share.
- Citigroup: $3.89B, $1.25/share
- Goldman Sachs: $1.93B, $3.70/share
- JPMorganChase: $6.1B, $1.60/share
- Wells Fargo: $5.27B, 98 cents/share
Bank of America, the second biggest U.S. bank by assets, has been cutting costs under CEO Brian Moynihan. It cut 18,300 jobs in the last year ast closed a number of branches. It also cut expenses about six per cent to $16 billion.
Its strongest growth area was investment banking and wealth management, though it also grew its business funding home mortgages and home equity loans. Bank of America also faced lower litigation expenses, having already settled several high-profile lawsuits related to its mortgage unit earlier this year.
Citigroup, reporting Monday, said second quarter profit rose 26 per cent rise to $3.89 billion US, or $1.25 per share, in the second quarter, up from $3.08 billion, or $1.00 per share, a year earlier.
Stronger home prices, fewer mortgage defaults
The third biggest bank said its recovery was due to stronger home prices, reduced losses on mortgages and a rebound in trading revenue.
Goldman Sachs, reporting Tuesday, said its second-quarter profit doubled to $1.93 billion US, or $3.70 a share, up from $927 million, or $1.78 a share, a year ago.
Revenue climbed 30 per cent to $8.6 billion, helped by gains in stock and bond underwriting and the bank's own investments.
The signs of a return to health in the banking sector come amid a renewed focus on bank regulation in the U.S.
Renewed focus on regulation
U.S. Treasury Secretary Jacob Lew said big banks could still threaten the financial system's stability because rules written three years ago in response to the 2008 financial crisis have not yet been put into place.
Hundreds of U.S. banks received taxpayer bailouts to weather the 2008 financial mayhem and the crisis dragged the economy into a downturn.
There is still wavering over capital adequacy ratios in the U.S. And new legislation proposed by a bipartisan group of senators would force banks to split off their conventional lending and deposit-taking into separate companies from investment banking and other risky activities.
Lew, who heads the Financial Stability Oversight Council, said that speeding up writing rules for the overhaul law is a high priority for him.