Brian Moynihan, CEO of Bank of America
Heidi Gutman | CNBC
Bank of America topped estimates for third-quarter profit on Tuesday on stronger-than-expected interest income.
Here’s what the corporate reported:
- Earnings per share: 90 cents vs. expected 82 cent estimate from LSEG, formerly often known as Refinitiv
- Revenue: $25.32 billion, vs. expected $25.14 billion
Profit rose 10% to $7.8 billion, or 90 cents per share, from $7.1 billion, or 81 cents a share, a yr earlier, the Charlotte, North Carolina-based bank said in a release. Revenue climbed 2.9% to $25.32 billion, edging out the LSEG estimate.
Bank of America said interest income rose 4% to $14.4 billion, roughly $300 million greater than analysts had anticipated, fueled by higher rates and loan growth.
Shares of Bank of America rose 1% in premarket trading.
CEO Brian Moynihan said the second biggest U.S. bank by assets continued to grow, despite signs of an economic slowdown.
“We added clients and accounts across all lines of business,” Moynihan said. “We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of last yr but continuing to slow.”
Bank of America was imagined to be one of the largest beneficiaries of higher rates of interest this yr. As an alternative, the corporate’s stock has been the worst performer amongst its big bank peers in 2023. That is because, under Moynihan, the lender piled into low-yielding, long-dated securities through the Covid pandemic. Those securities lost value as rates of interest climbed.
That is made Bank of America more sensitive to the recent surge within the 10-year Treasury yield than its peers — and more just like some regional banks which can be also nursing underwater bonds. Bank of America had greater than $100 billion in paper losses on bonds at midyear.
The situation has pressured the bank’s net interest income, or NII, which is a key metric that analysts will likely be watching this quarter. In July, the bank’s CFO, Alastair Borthwick, affirmed previous guidance that NII can be roughly $57 billion for 2023.
Bank of America stock had fallen 18% this yr through Monday, trailing the ten% gain of rival JPMorgan Chase.
Last week, JPMorgan, Wells Fargo and Citigroup each topped expectations for third-quarter profit, helped by better-than-expected credit costs. Morgan Stanley is scheduled to post results Wednesday.
This story is developing. Please check back for updates.