Bank of America Q2 Profit Declines Amid Shrinking Loan Interest Income

Bank of America's profit fell in the second quarter due to decreased loan interest income and higher provisions for credit losses. The bank earned $6.9 billion, down from $7.4 billion a year earlier. Rising interest rates have increased deposit costs, affecting net interest income, which fell 3% to $13.7 billion.

Bank of America's profit declined in the second quarter as decreased loan interest income and higher provisions for potential credit losses took a toll on its earnings.

The nation's second-largest lender reported earnings of $6.9 billion, or 83 cents per share, compared to $7.4 billion, or 88 cents per share, a year ago, according to a statement on Tuesday. Rising interest rates, the highest since 2007, have led banks to spend more to attract deposits, with alternatives like money market funds becoming more attractive due to boosted bond returns.

The increased cost of staving off deposit withdrawals has offset gains from higher interest payments charged to borrowers. Consequently, BofA's net interest income (NII) – the differential between loan earnings and deposit payouts – saw a 3% decline to $13.7 billion.

(With inputs from agencies.)