The largest US banks have resisted the recession caused by the coronavirus pandemic, but have not been immune to the low rates that the crisis has generated.
A drop in interest income helped to cut Bank of America Corp.’s profits, which fell 22% in the fourth quarter. The second largest bank in the United States said on Tuesday that its profit totaled $ 5.47 billion in the last three months of the year, against $ 6.99 billion a year earlier.
Earnings per share of 59 cents exceeded analysts’ estimates of 55 cents. Still, the year-over-year decline in earnings was the worst demonstration of any major bank to date. Goldman Sachs Group Inc. said on Tuesday that its fourth-quarter profit jumped 135%.
The very low interest rates have been a challenge for creditors, including Bank of America, which makes money from the difference between what it pays to depositors and what it earns from loans. Bank of America’s net interest income fell 16% from the previous year, to $ 10.25 billion, although it rose slightly compared to the third quarter.
Deposits at the bank increased by about a quarter last year, with nervous consumers and businesses looking for a safe place to keep their money. But the economic consequences of the coronavirus crisis have undermined customer demand for loans. The bank’s outstanding loan and lease portfolio, which initially grew at the start of the pandemic, shrank to $ 927.86 billion at the end of the year, the lowest in more than three years.