Bank of America beat third-quarter profit projections on Tuesday, thanks to higher-than-expected interest income.
- IMPORTANT NOTES
- Earnings and revenue at Bank of America exceeded Wall Street projections.
- The bank earned more interest than expected.
- Consumer spending, according to CEO Brian Moynihan, has continued to slow.
Here’s what the corporation said:
Earnings per share: 90 cents, compared to an expected 82 cents from LSEG, formerly known as Refinitiv.
Revenue: $25.32 billion, compared to the predicted $25.14 billion. Profit increased 10% to $7.8 billion, or 90 cents per share, from $7.1 billion, or 81 cents per share, a year earlier, according to a release from the Charlotte, North Carolina-based bank. Revenue increased 2.9% to $25.32 billion, exceeding the LSEG projection.
Bank of America reported a 4% increase in interest income to $14.4 billion, or around $300 million more than analysts expected, due to higher rates and loan growth. The bank’s provision for loan losses came in at $1.2 billion, less than the $1.3 billion expectation.
Bank of America’s stock increased 1.4% in premarket trading. Despite signals of an economic slowdown, CEO Brian Moynihan stated that the second largest bank in the United States by assets continues to grow. “We added clients and accounts across all lines of business,” Mr. Moynihan said. “We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of last year but continuing to slow.”
Bank of America was expected to benefit the most from increased interest rates this year. Instead, the company’s shares has underperformed its big bank counterparts in 2023. This is because, during the Covid epidemic, the lender piled into low-yielding, long-dated securities under Moynihan. As interest rates rose, the value of these securities fell.
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As a result, Bank of America is more vulnerable to the recent rise in the 10-year Treasury yield than its rivals—and more similar to several regional banks that are also holding underwater bonds. At the halfway point of the year, Bank of America had more than $100 billion in paper losses on bonds.
The scenario has weighed on the bank’s net interest income, or NII, a crucial indicator that analysts will be keeping an eye on this quarter. Alastair Borthwick, the bank’s CFO, confirmed in July that NII will be around $57 billion in 2023.
Bank of America’s shares has lost 18% this year through Monday, underperforming competitor JPMorgan Chase’s 10% increase.JPMorgan, Wells Fargo, and Citigroup all outperformed forecasts for third-quarter earnings last week, thanks to lower-than-expected credit charges. Morgan Stanley is set to report earnings on Wednesday.
Bank Of America History
The Bank of America Corporation is a multinational American investment bank and financial services holding firm headquartered in Charlotte, North Carolina, with investment banking and auxiliary headquarters in Manhattan. San Francisco, California, is where the bank was created. It is the second-largest bank in the United States, after JPMorgan Chase, and the world’s second-largest bank by market value. Bank of America is one of the United States’ Big Four banking institutions. It competes with JPMorgan Chase, Citigroup, and Wells Fargo for around 10.73% of all American bank deposits. Commercial banking, wealth management, and investment banking are its core financial services.
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The Bank of America Corporation (abbreviated BofA or BoA) is a multinational American investment bank and financial services holding firm headquartered in Charlotte, North Carolina, with investment banking and auxiliary headquarters in Manhattan. San Francisco, California, is where the bank was created. It is the second-largest bank in the United States, after JPMorgan Chase, and the world’s second-largest bank by market value. Bank of America is one of the United States’ Big Four banking institutions. It competes with JPMorgan Chase, Citigroup, and Wells Fargo for around 10.73% of all American bank deposits. Commercial banking, wealth management, and investment banking are its core financial services.
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