Bank of America profit falls on lower customer interest payments

April 16 (Reuters) – Bank of America’s (BAC.N), opens new tab first-quarter profit fell as its consumer division weakened and the lender wrote off more loans, particularly for credit cards.

BofA is among the large lenders, including rival JPMorgan, that are weighing the potential for the U.S. Federal Reserve to cut interest rates this year. The move could crimp banks’ income from interest payments, but could potentially spur economy activity and borrower demand.

BofA’s net interest income (NII) — the difference between what it earns on loans and pays for deposits — slid 3% to $14 billion in the quarter due to higher deposit costs and modest loan growth.

An uncertain economic outlook and shifting expectations for U.S. interest rate cuts have made it more difficult to predict future profits, banking executives said last week.

If the Federal Reserve keeps rates higher for longer in the coming months, lenders that made bumper profits from rising interest rates in the last two years could build on their gains. But their earnings could diminish if a potential economic slowdown deters borrowers from taking out loans.

Source: REUTER