During the quarter, net interest income (NII) amounted to
$12.1 billion on a GAAP basis and $12.3 billion on an FTE basis. NII was down compared
to Q1 2019 and flat versus Q4 2019. NII was negatively impacted by lower asset
yields driven by lower rates. This negative impact was offset by good loan and
deposit growth, and by a reduction in the cost of long-term debt due to lower
rates which improved funding costs in global markets.
Looking ahead, net interest income results will be
influenced by interest rates as well as loan and deposit balances which in turn
is likely to be highly influenced by the impact of the pandemic on the economy.
These drivers have been volatile and may continue to be in future.
In terms of NII for the rest of the year, based on the rate
movement related to banking book sensitivity at the end of last year, NII was
estimated to see a reduction of $6.5 billion over the following 12 months.
However, since these rates moved less than 100 basis points,
NII is expected to see a change of less than $6.5 billion over the next 12
months. The company expects to mitigate some of this decline through loan and
deposit growth as well as deposit pricing actions.
Taking into account all factors, NII is estimated to
approach $11 billion in Q2 and then stabilize with loan and deposit growth
mitigating the negative impacts of longer-term asset repricing.
Expenses increased 2% year-over-year to $13.5 billion as
increased investments in various initiatives were partly offset by savings from
operational excellence initiatives. The company is still assessing the impacts
of the pandemic on expenses and is not in a position to update its previous
outlook for expenses in the mid-$53 billion range for this year.
Shares of Bank of America were down 4% in afternoon hours on
Thursday. The stock has dropped 39% since the beginning of the year.