(CNN) - Bank of America hauled in its fattest profit ever during the second quarter thanks to sturdy spending from households that offset trouble in markets.
The results from one of the nation's largest banks paint an optimistic picture about the American economy even as the Federal Reserve prepares a rescue aimed at speeding growth up. However, Bank of America joined a chorus of other banks warning that those looming Fed rate cuts will hurt lending profitability.
Bank of America said on Wednesday that its profit jumped 8% during the second quarter to $7.3 billion, marking a record for the lender. For the first six months of 2019, Bank of America hauled in $14.7 billion, also setting a record for the first-half of a year.
Bank of America, which serves one in two US households, said that its view of the landscape points to a "steadily growing economy."
"We see solid consumer activity across the board," CEO Brian Moynihan said in a statement.
That household strength lifted Bank of America's consumer banking profit by 13% during the quarter. Average deposits grew by a steady 3% to $707 billion, while loans climbed by a healthy 6%.
US households continue to be the bright spot in the economy, underscored by a jump in June retail sales reported earlier this week.
Yet Bank of America dimmed its outlook for lending profits beause of shifts in borrowing costs. Although banks were boosted by the Fed's string of rate hikes, signs of rate cuts will have the opposite effect. That's because banks make money on the gap between interest paid on deposits and charged to borrowers.
Bank of America said its net interest income will rise by just 1% in 2019 if the Fed lowers rates twice this year. That compares with the company's previous call for net interest income of 3%.
Still, Bank of America signaled strength from the business sector, despite the ongoing US-China trade war. Average loans and leases in its global banking division rose 5%, while deposits climbed 12%.
"We also see consistent borrowing and activity from our commercial and corporate clients," Moynihan said.
Like other big banks, Bank of America's markets business stumbled as vanishing volatility caused by the Fed's pivot led trading volumes to dry up. While that's great news for individual investors, slow trading pressures fees.
Global markets profit fell 7% at Bank of America, driven by a 6% decline in sales and trading revenue.
Unlike Goldman Sachs, which reported an increase in stock trading revenue, Bank of America suffered a 13% tumble in that area. It blamed weaker performance in derivatives in Europe, the Middle East and Asia. Fixed income revenue also dipped 8% due to "lower client activity" in most products.
Big banks continue to pad their bottom lines by ramping up share buybacks, which shrink share counts and boost per-share profits. Bank of America repurchased $6.5 billion of its stock last quarter alone. Including $1.4 billion in dividends, Bank of America said it returned 112% of its net income.
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