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Bank of America’s first-quarter profits fall 18% due to higher costs and charge cuts

NEW YORK (AP) — Bank of America said first-quarter profit fell 18% as the bank faced rising costs due to the impact of higher interest rates. But the results exceeded analysts’ expectations.

The Charlotte, North Carolina-based bank posted a profit of $6.67 billion, or 76 cents per share, compared with $8.2 billion, or 94 cents per share, in the same period a year earlier. BofA had to make a one-time payment of $700 million to the Federal Deposit Insurance Corp. to help the agency replenish the deposit insurance fund.

Excluding that one-time charge, the bank earned 83 cents per share.

Bank of America has been dealing with the impact of higher interest rates on its lending and investment portfolio over the past year. The bank bought a significant number of bonds during the pandemic when rates were low, and those bonds have lost value as rates rose.

The bank also pays more on deposits, putting some pressure on profits. The bank’s net interest yield, which is a measure of how much the bank earns on the loans it has versus the interest it has to pay to savers, fell from 2.20% in 2023 to 1.99% in 2024.

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In BofA’s consumer banking division, the largest by revenue and profit, revenue fell 5% to $10.2 billion. Although the bank said it saw consumers opening more accounts and spending more on their credit and debit cards, the bank had to set aside more money to cover potential loans and charge credit cards.

Investment banking revenues were largely flat, but the bank saw modest growth in investment banking fees and trading income in the quarter.

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