Bank of America said it made a record $6.9 billion in profit during the first three months of the year as the bank got a lift from rising interest rates and new cuts to corporate taxes.
The Charlotte-based bank said Monday its profit rose 30 percent from the same period a year ago. Revenue rose 4 percent to $23.1 billion in the latest quarter in which Federal Reserve increases in short-term interest rates have helped boost the bank's results.
The quarter is also the first to show how the bank is benefiting from federal tax legislation passed in December that slashes the rate corporations pay on their profits. The bank reported paying $1.47 billion in income taxes — down more than 25 percent from the same quarter last year.
Monday's profit was the highest for any quarter in the bank's history, CEO Brian Moynihan noted. He attributed the performance in part to a growing global economy and strong U.S. consumer activity, as well as his ongoing push for "responsible growth" at the second-largest U.S. bank by assets.
"The momentum our team has built over the last several years again showed up with strong earnings," said Moynihan, who took over the bank in 2010.
Monday's results also reflect Moynihan's continued focus on chipping away at expenses. Under previously announced plans, the bank is pushing to lower annual noninterest expenses to about $53 billion by the end of 2018.
Employment at the bank has fallen amid efforts to lower costs, a trend that continues but at a much slower pace than in recent years.
Employment, which stands at 207,953, dropped less than 1 percent in the first quarter from the previous three months. The bank has said it employs about 15,000 in the Charlotte region.
Moynihan noted that amid the cost-cutting the bank continues to invest heavily in areas such as new mobile-banking services for customers. Also, even as employment has fallen overall, Bank of America has added workers in roles dealing directly with customers, Moynihan said, pointing to 1,500 such additional positions over the past year.
Bank of America said last year's tax overhaul cut its effective tax rate in the quarter by 9 percentage points. But the bank also noted that its performance in the quarter was strong without factoring in the lower rate. Pretax profit rose 15 percent, to $8.4 billion, compared with the same quarter last year, as loans and deposits grew.
As rising interest rates help its results, Bank of America continues to face questions about when it will start paying retail account customers higher interest for their deposits.
Those questions follow steady rate increases by the Fed that have led banks to slap consumers with higher interest on loans. March marked the sixth time the Fed has raised rates since the financial crisis.
Banks have been much faster to pass on the benefits of rising interest rates to corporations and wealthier clients compared with Main Street savers.
In a call with analysts, Chief Financial Officer Paul Donofrio said the bank hasn't moved more quickly to raise rates for customers because it delivers other valuable services, including "transparency, convenience, safety, mobile banking, online banking." The list also includes the bank's "virtual assistant" for phones, Erica, he said.
"I think this value, plus the lack of market pressure so far, has allowed us to keep deposit rates relatively flat on traditional accounts," he said. "We're going to continue to balance the needs of our customers and the competitive market environment with that of our shareholders' interests, and we'll do the right thing at the right moment."
Among big banks, Bank of America trailed JPMorgan Chase in first-quarter earnings ($8.71 billion) but made more than Wells Fargo ($5.9 billion) and Citigroup ($4.62 billion). Wells may also need to restate its earnings because of expected fines from regulators over auto insurance and mortgage practices.