Bank of America (BAC) reported better-than-expected third quarter profit and revenue due
largely to gains achieved in interest income as rates continue to rise.
The bank, which is the second largest U.S. financial institution by market capitalization, reported
Q3 earnings per share of $0.81 U.S. versus $0.77 U.S. that had been expected on Wall Street.
Revenue in the quarter amounted to $24.61 billion U.S. versus $23.57 billion U.S. that was
forecast by analysts.
While better than expected, Bank of America said in a new release that its third quarter profit fell
8% to $7.1 billion U.S., or $0.81 U.S. a share, as it recorded an $898 million U.S. credit loss.
Bank of America said higher interest rates charged on its various loans is producing more
revenue, allowing it to generate more profit even as other areas of its business, such as
investment banking, experience steep declines.
Net interest income at the bank jumped 24% in the July through September period to $13.87
billion U.S., topping the $13.60 billion U.S. that was forecast.
As well, fixed income trading revenue surged 27% to $2.60 billion U.S in Q3, crushing the $2.24
billion U.S. estimate of analysts.
However, Bank of America’s investment banking revenue posted a steep decline in the quarter,
falling 46% to $1.20 billion U.S., only slightly exceeding the $1.13 billion estimate on Wall
Street.
Bank of America released $1.10 billion U.S. in reserves in Q3 2021 but had to build reserves by
$378 million U.S. in the third quarter of this year.
Bank of America’s stock rose 3% in premarket trading on news of its latest earnings. Year-to-
date, the bank’s stock is down 31% and trading at $31.70 U.S. per share.
