Bank of America (BAC) is beefing up its cash pile to fend off what it expects to be billions in pandemic-related loan-defaults from consumers and businesses.
The Charlotte-based bank on Thursday 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.
JPMorgan Chase (JPM) - Get Report, Wells Fargo (WFC) - Get Report and Citigroup (C) - Get Report have already set aside nearly $28 billion of credit-loss provisions. Wells Fargo alone earlier this week reported not only earnings significantly below last year’s numbers but a surging balance sheet reflecting a dash to cash - and also massive loan-loss provisions in anticipation of loan defaults.
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