Bank of America profit beats as healthy economy fuels loan growth

Bank of America Corp beat estimates for quarterly profit on Wednesday, as the United States' second-largest lender's loan book benefited from a healthy domestic economy.

Consumer banking has held up for the big Wall Street banks that have reported second-quarter results this week, cushioning a blow from weakness in trading and advisory businesses.

But warning signs also emerged with JPMorgan, Citigroup and Well Fargo reporting a dip in margins, stoking fears that interest rate cuts could further pressure profit by reducing the spread between what banks charge on loans and pay on deposits.

BofA, however, bucked the trend and reported a 3 basis-point increase in its interest margin to 2.44% for the second quarter.

The lender is the most sensitive of the big US banks to interest rate changes because of its large deposit stock and rate-sensitive mortgage securities.

Total loans in its consumer banking unit rose 6%, while deposits were up 3%, pushing income from the business up 13% to $3.3 billion.

"We see solid consumer activity across the board, with spending by Bank of America consumers up 5% this quarter over the second quarter of last year," Chief Executive Brian Moynihan said in a statement.

Growth in the consumer business helped offset softness in the Bank of America's market revenue and Wall Street businesses.

Adjusted revenue from BofA's global market business, which includes bond and equities trading, fell 5.7% to $4.18 billion.

Net income applicable to common shareholders rose 10% to $7.11 billion, or 74 cents per share, in the second quarter ended June 30. Excluding items, the bank earned 75 cents per share.

Revenue, net of interest expense, was up about 2% at $23.08 billion.

Analysts had expected a profit of 71 cents per share and revenue of $23.2 billion, according to IBES data from Refinitiv.