Borrowers have been taking advantage of Bank of America's (NYSE:BAC) loan deferral program. The big bank revealed in a regulatory filing that it has provided such postponements to consumer and commercial loan balances worth $28.5 billion total as of July 23. Clients have made roughly 1.8 million deferral requests, and the company has so far granted around 1.4 million of them.
In March, Bank of America launched its deferral program as part of a broader package of customer assistance measures. Small business credit card borrowing was the most impacted segment, as 20% of loan balances took deferrals.
IMAGE SOURCE: BANK OF AMERICA.
The runner-up was small business non-credit card lending, where 14% of balances were affected. Seven percent of consumer credit card debt balances had deferrals, while mortgage and home equity lines of credit (HELOCs) had 6%.
The terms of the deferrals depend on the type of loan balance. For small business payment card borrowing, the bank may grant a first deferral up to 90 days. This is accompanied by automatic extensions for payments due through Aug. 15. The terms are similar for consumer credit card debt, but the initial deferral period only lasts 60 days.
As with other lenders, Bank of America is facing a potential crisis of widespread loan defaults, given the sudden and sharp economic damage caused by the COVID-19 pandemic. It has, like its peers, dramatically increased its loan-loss provisioning to cope with this.
On Monday, Bank of America's shares ticked up by 0.4%, slightly lagging behind the gains of the broader stock market.
