Bank of America Corp., the second-largest U.S. lender, has reported strong earnings for the third quarter, primarily driven by the better-than-expected performance of its investment banking and trading divisions.
In the third quarter, the bank achieved a profit of 90 cents per share and saw its net income increase by 10% to reach $7.8 billion.
Notably, the consumer banking unit recorded a 6% increase in revenue, totaling $10.5 billion. Bank of America also reported resilient spending on debit and credit cards, which rose by 3% during the quarter.
CEO Brian Moynihan emphasized the bank’s successful addition of clients and accounts across all lines of business. Moynihan acknowledged that this growth occurred in a healthy but slowing economy, with U.S. consumer spending still ahead of the previous year but continuing to slow.
However, Moynihan also cautioned that Americans are reducing their spending after depleting their pandemic savings. Additionally, they now face the challenge of rising costs due to inflation.
Bank of America’s shares, which had declined by 19% year-to-date through Monday, increased by 1% in premarket trading following the positive earnings report.
The bank recorded a total of $1.2 billion in investment banking fees during the third quarter, reflecting a 2% increase. Sales and trading revenue also saw a strong performance, rising by 8% to $4.4 billion.
In addition, the bank reported that its net interest income (NII) for the third quarter increased by 4% to reach $14.4 billion.
During the same quarter, the bank reported unrealized losses of $131.6 billion on securities held until maturity, showing growth from the nearly $106 billion reported in the second quarter.
The bank’s revenue, net of interest expense, also witnessed a 3% increase during the quarter, totaling $25.2 billion.
At the end of the third quarter, Bank of America’s loan balances rose to $1.049 trillion, marking an increase of 1.6% from the previous year.
In related news, U.S. investment bank Goldman Sachs reported a fall in third-quarter profit, citing net losses in equity investments compared to the same period a year ago. The bank reported a profit of $1.9 billion, which is down by 36% from the same period last year.
Bank of America’s strong Q3 earnings reflect the resilience and growth in various sectors, particularly in investment banking and trading, amidst the changing economic landscape.
