Bank of America posted a second-quarter profit that was roughly half of what it earned a year ago and warned that it was bracing for substantial loan losses amid the coronavirus pandemic that has temporarily stalled what banks see is a pending wave of consumer and business loan defaults.
Bank of America said it earned $3.5 billion, or 37 cents a share, roughly half the $7.3 billion, or 74 cents a share, it earned in the comparable year-ago period. Analysts polled by FactSet had been expecting earnings of 28 cents a share.
Revenue net of interest expense fell 3% to $22.3 billion from $23.1 billion a year ago.
Provisions for credit losses, meanwhile, a measure of what the bank expects to potentially write off in soured loans and other investments, rose to $5.1 billion, the bulk of which was driven by a $4 billion reserve build, the bank said. That was on top of the nearly $4.8 billion it set aside at the end of its first quarter.
Calling it “the most tumultuous period since the Great Depression,” CEO Brian Moynihan said in a statement that “strong capital markets results provided an important counterbalance to the Covid-19-related impacts on our consumer business.”
So, what was Jim Cramer's takeaway?