Bank of America Beats Estimates on Trading and Net Interest Income Gains
Bank of America Corp. reported third-quarter earnings that beat analysts’ estimates, driven by higher trading revenue and net interest income.
Strong Trading Revenue
The Charlotte, North Carolina-based bank reported net income of $6.7 billion, or 74 cents a share, compared with $6.2 billion, or 70 cents, a year earlier. Analysts had estimated 68 cents a share.
The bank’s trading revenue rose 11% to $3.9 billion, beating the $3.6 billion average estimate of analysts surveyed by Bloomberg. The bank’s trading revenue was driven by higher activity in fixed-income and equity markets.
Net Interest Income
Net interest income, the difference between what the bank earns on loans and pays out on deposits, rose 4.2% to $12.2 billion. The bank’s net interest margin, a measure of profitability, rose to 2.41% from 2.37%.
The bank’s loan portfolio grew 4.2% from a year earlier, driven by growth in consumer and commercial loans. The bank’s consumer loan portfolio grew 5.2%, while its commercial loan portfolio grew 3.7%.
Non-Interest Income
Non-interest income, which includes fees from investment banking and wealth management, rose 6.2% to $10.3 billion. The bank’s wealth management business reported a 6.7% increase in revenue, while its investment banking business reported a 5.3% increase in revenue.
The bank’s expenses rose 4.2% to $14.2 billion, driven by higher personnel costs and legal expenses. The bank’s personnel costs rose 5.2%, while its legal expenses rose 8.2%.
Capital Ratios
The bank’s capital ratios remained strong, with its common equity tier 1 ratio rising to 12.7% from 12.3%. The bank’s total risk-based capital ratio rose to 15.2% from 14.8%.
Outlook
Bank of America’s strong third-quarter results are a sign that the bank is well-positioned to continue to grow in the coming quarters. The bank’s strong capital ratios and loan portfolio growth are a sign that the bank is well-positioned to weather any economic downturns.
The bank’s strong trading revenue and net interest income are a sign that the bank is well-positioned to continue to generate strong revenue in the coming quarters. The bank’s non-interest income is also a sign that the bank is well-positioned to continue to generate strong revenue from its wealth management and investment banking businesses.
Overall, Bank of America’s strong third-quarter results are a sign that the bank is well-positioned to continue to grow in the coming quarters. The bank’s strong capital ratios, loan portfolio growth, trading revenue, net interest income, and non-interest income are all signs that the bank is well-positioned to continue to generate strong revenue and profits in the coming quarters.