Bank of America is preparing for a spike in bad loans linked to the coronavirus crisis.
The No. 2 US bank announced Wednesday it set aside $4.8 billion for credit losses during the first quarter. That's up sharply from $1 billion a year before, reflecting the collapse of the economy because of the pandemic.
Bank of America (BAC) built its loss-absorbing reserves by $3.6 billion. The bank cited a "deteriorating economic outlook related to COVID-19."
Bank of America emphasized it continues to lend to consumers and small businesses.
As of April 8, Bank of America received 279,000 small business loan applications worth $43 billion under the stimulus package's forgivable loan program, called the Paycheck Protection Program.
The bank's loan balances ended the quarter at $1 trillion, up 7% from the end of 2019. Deposits climbed 6% to $1.4 trillion.
Bank of America said it provided nearly 1 million payment deferrals through April 8.
"We are taking extraordinary steps to support our employees, clients and communities during this humanitarian crisis," said CEO Brian Moynihan.