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Bank of America focuses on increasing loans after the absence of a rise in interest

Shares of America’s second-largest lender Bank of America fell after expressing concern about low interest rates and the Federal Reserve’s indication that it was not planning to raise the benchmark interest rate anytime soon, sending the bank’s stock down 5% during yesterday’s trading.

The bank’s management changed its strategies several times to improve its performance, but the interest rate changes were unpredictable for more than a decade, and despite the increase in the net income of Bank of America during the second quarter by 173% compared to the year in the same period a year ago to nearly $9 billion. However, net interest income has fallen by more than 6%.

Management has provided solid earnings expectations if loan demand improves or interest rates somehow rise, but analysts are skeptical that this will happen in the near term.

Higher demand for loans will help Bank of America make more money from deposits, because the bank will bet on loan growth to the levels it sees fit rather than trying to invest and see trends in interest rates.

It is worth noting that the demand for loans has started to rise during the second quarter so far, as average loan bookings in Bank of America increased by 0.02% compared to the previous quarter, but it is still down by 12% compared to the same period a year ago. As for the bank’s deposits, it jumped by 14% to record $1.9 trillion.

Overall, the bank collected quarterly profits of $8.96 billion, or $1.03 per share, exceeding analyst estimates, which were 77 cents per share, noting that earnings were 3.28 billion, or 37 cents per share, a year ago. As for net income, it fell by 4% to reach $21.5 billion, while net interest income fell by 6% from $10.8 billion to 10.2 billion.

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