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Bank of America joined rivals JPMorgan Chase and Wells Fargo in strengthening its buffer against coronavirus-related costs, setting aside an additional $3.6 billion to cover delinquent loans.
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The buildout in so-called reserves helped drag net income down 45 percent to $4 billion, or 40 cents a share, in the three months through March, the Charlotte, N.C.-based company said in a statement.
The lender’s profitability despite the reserve increase shows CEO Brian Moynihan’s success in positioning the bank to be a “source of strength” as government measures intended to limit the COVID-19 pandemic shutter swaths of the U.S. economy and send unemployment soaring, executives said.
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That security is a sharp turnaround from the 2008 financial crisis, when the acquisitions of subprime lender Countrywide Financial and investment Bank Merrill Lynch under Moynihan’s predecessor, Ken Lewis, forced the company to take a $45 billion bailout.
“Ten years ago, we set out to transform our business and operate under the principles of responsible growth so we would be a source of strength in the next crisis,” Chief Financial Officer Paul Donofrio said in a statement. “Our results this quarter reflect our progress.”
The bank ended the first quarter of 2020 with more liquidity than when it began, Moynihan noted.
Bank of America has received nearly 1 million requests for help so far as the economic shutdown left small businesses and consumers alike struggling to cover rent and mortgages and has committed $100 million to aid local communities, he added.
“We are taking extraordinary steps to support our employees, clients and communities during this humanitarian crisis,” Moynihan said.
