NEW YORK: Bank of America reported Wednesday that its quarterly profits dropped by 45 percent from a year ago, the latest major bank to say it took a hard hit from the coronavirus pandemic.
Like JPMorgan Chase and Wells Fargo, Bank of America had to set aside billions of dollars to cover potentially bad loans. Many of these loans were fine only weeks ago, but the pandemic has caused companies to shutter and millions of Americans to be put out of work.
The amount of money BofA set aside for loan losses nearly quintupled from a year ago, from $1.01 billion to $4.76 billion. The losses came from the bank’s consumer lending division — BofA is a large credit card issuer and has a massive consumer banking business. The bank also reserved for bad loans in its lending division to businesses.
Despite the hit, BofA’s results were notably stronger than rivals JPMorgan and Wells, who both saw steeper profit declines and proportionately set aside more money to cover loan losses. It’s a change from the Bank of America of the Great Recession, which was one of the worst actors of the crisis and needed substantial taxpayer assistance to absorb its poor decisions.
“Ten years ago, we set out to transform our business and operate under the principles of responsible growth so we would be a source of strength in the next crisis,” said Paul Donofrio, the bank’s chief financial officer, in a statement. “Our results this quarter reflect our progress.”
The Charlotte, N.C. based bank said it earned a profit of $4.01 billion, or 40 cents a share, down from $7.31 billion or 70 cents a share, a year earlier. The results missed analysts’ expectations, however, forecasts for the banks varied widely due to the fact the pandemic happened suddenly.
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