Brian Moynihan, CEO of Bank of America
Heidi Gutman | CNBC
Bank of America beat analyst expectations for third-quarter earnings and revenue on better-than-expected trading results.
This is what the company reported:
- Income: 81 cents vs. 77 cents LSEG estimate
- Gain: $25.49 billion vs. $25.3 billion estimate
The couch said On Tuesday, net income fell 12% from a year earlier to $6.9 billion, or 81 cents per share, due to higher provisions for credit losses and rising costs.
Revenue rose less than 1% to $25.49 billion as gains from trading revenue, asset management and investment banking fees offset a decline in net interest income.
The bank’s shares rose about 2% in early trading.
Bank of America, led by CEO Brian Moynihan since 2010, demonstrated the benefits of having a massive and diversified financial institution. Analysts have focused on the bank’s core business of attracting deposits and making loans to consumers and businesses, as rising interest rates have sapped the company’s interest income.
But the quarter showed that the bank, like its rivals, is also benefiting from rising Wall Street activity through its trading and advisory businesses JPMorgan Chase And Goldman Sachs did.
Fixed income trading revenue rose 8% to $2.9 billion, ahead of the StreetAccount estimate of $2.74 billion, thanks to strong currencies and rates activity. Shares traded rose 18% to $2 billion, ahead of the StreetAccount estimate of $1.81 billion, thanks to higher cash and derivatives volumes.
Investment banking expenses also rose 18% to $1.40 billion, higher than StreetAccount’s $1.27 billion estimate.
Although net interest income fell 2.9% from a year earlier to $14.1 billion, this exceeded the StreetAccount estimate of $14.06 billion.
That third quarter NII figure was higher than the second quarter, a sign that the trajectory for this key metric is improving. The lender said in July that there would be a recovery in net interest income in the second half of the year.
Bank of America “appears to be turning the corner on the NII inflection,” although the extent from here on out depends on interest rates, Wells Fargo analyst Mike Mayo said in a note Tuesday.
NII, one of the main ways banks make money, is the difference between what a bank makes on loans and investments and what it pays depositors for their savings.
The bank’s provision for loan losses in the quarter of $1.5 billion was slightly below the estimate of $1.57 billion.
JPMorgan Chase and Wells Fargo posted profits that beat expectations on Friday, helped by their investment banking operations. Goldman Sachs And Citi Group also reported results on Tuesday, while Morgan Stanley announces earnings on Wednesday.
This story is developing. Check back later for updates.