How much of Bank of America’s revenue comes from haram?

Bank of America earns  its revenue from the following revenue sources:

  • Interest Income:

Includes interest earned from lending services. 

  • Noninterest Income:

Includes revenue earned from service charges, investment banking fees, brokerage services, and credit card fees.

The contributions from each of Bank of America’s revenue segments in their 2020 annual report were as follows:

Practical Islamic Finance concludes:

A material part of Bank of America’s revenue comes from haram.

Does Bank of America rely on interest to operate?

Year-to-Date
for period ended
3/31/2021
Fiscal year
ended
12/31/2020
Fiscal year
ended
12/31/2019
Interest Income$10,197,000$51,585,000$71,236,000
Total Revenue$22,821,000$93,753,000$113,589,000
Interest Expense $1,198,000$8,225,000$22,345,000
Total Expenses$16,713,000$1,906,700$77,245,000
Interest Income / Revenue44.68%55.02%62.71%
Interest Expense / Total Expense7.17%12.96%28.93%
*Numbers in thousands, U.S. dollars

Practical Islamic Finance concludes:

There is a systemic reliance on interest in Bank of America’s operations.

What is Bank of America’s Environmental, Social, and Governance (ESG) impact?

Lending capital for profit and ceasing the borrower’s assets if they can’t make repayments is not fair to the borrower because it places all the contractual risk on their shoulders alone.

Therefore, from an ethical perspective, Islam finds interest-bearing debt (ribawi loans) to be unconscionable (unfairly one-sided in favor of the lender).

From a practical perspective, Islam sees the impact of interest-bearing loans as detrimental to the individual, society and the environment.

An honest examination of some of the most detrimental human behaviors can often be traced back to the pressures of interest-bearing debt.

Practical Islamic Finance concludes:

Bank of America has a net negative ESG impact.

Comfort Rating

From Bank of America’s business, financial, and ESG reviews, Practical Islamic Finance rates Bank of America stock as:

Uncomfortable to invest in from a Halal perspective.

Justification for Our Rating

The Prophet Muhammad (peace be upon him) cursed the one who consumes riba (interest), the one who pays it, the one who writes it down (documents the contract), and the two witnesses of the agreement, and he said: they are all the same (in sin).

It’s clear from this hadith that being involved in riba-based contracts is a serious sin that Muslims should avoid.

Consequently, we are entirely Uncomfortable investing in Bank of America from a halal perspective.

Sources

Bank of America 2020 10-K 

Bank of America Q1 10-Q 

Authors