Bank of America posted first-quarter profit on Monday that exceeded analysts’ estimates, helped by the better-than-expected credit quality of its borrowers.
The bank said that profit declined 12% to $7.07 billion, or 80 cents per share, exceeding the 75 cent estimate of analysts surveyed by Refinitiv. Revenue climbed 1.8% to $23.33 billion, roughly matching expectations. Shares of the bank climbed 4.1%.
Bank of America said that a run of strong credit at the second-biggest U.S. lender by assets continued into the first quarter. Net loan charge-offs, an industry term for what happens when borrowers fall behind on their payments, dropped 52% from a year earlier to $392 million. That was less than half of the $848.7 million StreetAccount estimate.
The bank posted a mere $30 million provision for credit losses, which is tied to management’s view of potential future losses, far less than the $468 million expected by analysts. It also released $362 million in reserves the bank had previously set aside for expected defaults.
“First-quarter results were strong despite challenging markets and volatility, which we believe reflect the value of our `Responsible Growth’ strategy,” CFO Alastair Borthwick said in the release. “Asset quality continued to remain strong with net charge-offs about half of the year-ago quarter amount.”