Bank of America profit more than doubles on reserve release boost

Bank of America profit more than doubles on reserve release boost

Bank of America (NYSE:BAC) UP 1.42% AT 39.88

Bank of America Corp’s profit more than doubled in the first quarter and topped Wall Street estimates as it released reserves it had set aside to cover potential coronavirus loan losses.

The second-largest U.S. bank by assets unlocked $2.7 billion from its reserves and unveiled a $25 billion stock repurchase plan, betting on a swift economic recovery driven by rapid vaccinations.

Consumer banking revenue at the bank, however, fell 12% to $8.1 billion in the quarter ended March. Net interest income, a key measure of how much the bank can make from lending, fell 16% to $10.2 billion in the quarter.

“While low interest rates continued to challenge revenue, credit costs improved and we believe that progress in the health crisis and the economy point to an accelerating recovery,” Brian Moynihan, the bank’s chairman and chief executive, said in a statement.

The Federal Reserve last year brought in ultra-low interest rates to allow for a more rapid recovery from the pandemic-induced recession. However, such low rates eat into the income of lenders like Bank of America (NYSE:BAC), which make profit from the difference between what they earn on loans and pay out on deposits.

On technical fronts Bank of America (NYSE:BAC) RSI stood at 62.42 and currently stock is trading Above All Moving Averages. So, BUY position can be taken with following target and stoploss.

TRADE SIGNAL -: Bank of America (NYSE:BAC) – BUY: 39.88, TARGET: 47.63, STOP LOSS: 38.37

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