The largest US banks have weathered the recession triggered by the coronavirus pandemic, but they have not been immune from the low rates ushered in by the crisis.
A drop in interest income helped drive earnings down at Bank of America Corp., which fell 22% in the fourth quarter. The second-largest bank in the US said on Tuesday that its profit for the last three months of the year was $ 5.47 billion, up from $ 6.99 billion a year earlier.
Earnings per share of 59 cents exceeded analyst estimates of 55 cents. Still, the year-on-year earnings decline was the worst result of any major bank to date. Goldman Sachs Group Inc. said Tuesday that fourth-quarter earnings were up 135%.
The lowest interest rates have been a challenge for lenders, including Bank of America, who make money off the difference between what they pay to savers and what they earn from lending. Bank of America’s net interest income was down 16% from a year earlier to $ 10.25 billion, although it was slightly higher than in the third quarter.
Deposits at the bank grew by about a quarter in the past year, with nervous consumers and businesses looking for a safe place to store their money. But the economic ramifications of the coronavirus crisis have diminished customer demand for loans. The bank’s outstanding loans and leases, which had initially grown at the start of the pandemic, shrank to $ 927.86 billion at the end of the year, the lowest in more than three years.