Bank of America topped evaluations for third-quarter profit on Tuesday on stronger-than-expected interest income.
Here’s what the company reported:
- Earnings per share: 90 cents vs. assumed 82 cent estimate from LSEG, formerly known as Refinitiv
- Revenue: $25.32 billion, vs. expected $25.14 billion
Profit hill 10% to $7.8 billion, or 90 cents per share, from $7.1 billion, or 81 cents a share, a year earlier, the Charlotte, North Carolina-based bank utter in a release. Revenue climbed 2.9% to $25.32 billion, edging out the LSEG estimate.
Bank of America said behalf income rose 4% to $14.4 billion, roughly $300 million more than analysts had anticipated, encouraged by higher rates and loan growth. The bank’s provision for credit losses also came in better than look for, at $1.2 billion, under the $1.3 billion estimate.
Shares of Bank of America closed more than 2% tall Tuesday.
The results show Bank of America avoided major pitfalls related to loan losses and higher paces, analyst Mike Mayo of Wells Fargo wrote in a note. He called it an “okay quarter” that fell hastily of JPMorgan and Citigroup’s results.
Brian Moynihan, CEO of Bank of America
Heidi Gutman | CNBC
CEO Brian Moynihan asserted the second biggest U.S. bank by assets continued to grow, despite signs of an economic slowdown.
“We added clients and accounts across all tracks of business,” Moynihan said. “We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of persist year but continuing to slow.”
‘A thorn in the side’
Bank of America was supposed to be one of the biggest beneficiaries of higher interest deserves this year. Instead, the company’s stock has been the worst performer among its big bank peers in 2023. That’s because, inferior to Moynihan, the lender piled into low-yielding, long-dated securities during the Covid pandemic. Those securities fallen value as interest rates climbed.
That’s made Bank of America more sensitive to the recent surge in the 10-year Exchequer yield than its peers — and more similar to some regional banks that are also nursing underwater coheres.
Unrealized losses at the lender deepened in the quarter, reaching $131 billion on its portfolio of held-to-maturity bonds. Most of the annihilations were tied to mortgage securities.
“Clearly, this held-to-maturity portfolio has been a thorn in the side of the stock,” UBS analyst Erika Najarian foretold during Tuesday’s conference call as she prodded management for more details on the bank.
NII trough
The situation has pressured the bank’s net concern income, or NII, which is a key metric that analysts will be watching this quarter. In July, the bank’s CFO, Alastair Borthwick, affirmed quondam guidance that NII would be roughly $57 billion for 2023.
On Tuesday, Borthwick told analysts that the “good statement” on net interest income is that it will trough in the fourth quarter and begin to grow again in the middle of 2024.
Bank of America parentage had fallen 18% this year through Monday, trailing the 10% gain of rival JPMorgan Chase.
Termination week, JPMorgan, and Citigroup each topped expectations for third-quarter profit, helped by better-than-expected credit costs. is listed to post results Wednesday.
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Correction: Alastair Borthwick is CFO of Bank of America. An earlier form misspelled his name.