Bloomberg

Bank of America (BAC - Get Report)  posted stronger-than-expected second-quarter profits Wednesday as the second-biggest U.S. lender increased loans and deposits, boosting interest income to offset a slump in the trading business.

Net income rose by 8% from a year earlier to $7.3 billion, Charlotte, North Carolina-based Bank of America said in a press release, pegging earnings per share at 74 cents. The results beat the 71-cent average estimate of Wall Street analysts in a survey by data provider FactSet. Revenue rose by 2.7% to $23.1 billion, Bank of America said, while non-interest expenses were little changed.

"We see solid consumer activity across the board, with spending by Bank of America consumers up 5%," said CEO Brian Moynihan. "We also see consistent borrowing and activity from our commercial and corporate clients, who are well positioned to take advantage of opportunities that arise as trade and other open issues are resolved."

Bank of America shares edged modestly lower in pre-market trading following the earnings release to indicate an opening bell price of $28.98 each.

Wall Street analysts have warned that U.S. banks are facing a tougher operating environment than last year, when markets were buoyant following President Donald Trump's $1.5 trillion of tax cuts. Investors have fretted over the potential damage to the economy from Trump's trade war with China, which has prompted some business executives to delay or cancel planned spending on new equipment, factories, technology or personnel. 

The Federal Reserve is moving toward a likely interest-rate cut later in July, which could put a squeeze on lending profits, even as competition heats for deposits, with more online lenders trying to lure savers away from traditional accounts at bricks-and-mortar branches.

Bank of America, like rival U.S. banks JPMorgan Chase (JPM - Get Report) , Citigroup (C - Get Report) and Goldman Sachs (GS - Get Report) , said that client activity slowed during the quarter in global financial markets, leading to declines in revenue from the trading business.

Revenue from trading bonds, commodities and currencies slid by 8% to $2.1 billion, after certain adjustments, according to the bank. 

And stock-trading revenue tumbled by 13% to $1.1 billion.

The bank noted "lower client activity across most products" in the bond division, and a weaker performance in stock-related derivatives in its European business region.   

Based on the bottom line, Bank of America's profit growth ranks third among large U.S. banks that have posted results for the period so far. 

JPMorgan's net income rose by 16% from a year earlier to $9.65 billion, while Wells Fargo WFC posted an 11% increase to $3.1 billion and Citigroup's profit climbed by 7% to $4.8 billion.

Goldman's earnings fell by 6% to $2.42 billion.