Bank of America (BAC.US) reported better-than-expected Q3 earnings, thanks to gains in a volatile market and net interest income that exceeded analyst expectations. Despite a decline in net interest income, revenue in the third quarter rose by less than 1% to $25.49 billion, surpassing the market expectation of $25.3 billion. The bank's net profit for the third quarter fell 12% year-over-year to $6.9 billion, or 81 cents per share, partly due to increased loan loss provisions and expenses.
The earnings report showed that driven by growth in trading revenue, asset management, and investment banking fees, Bank of America's equity and fixed income, currency, and commodities trading income increased by 12% in the third quarter, reaching $4.93 billion. Fixed income trading income grew by 8% to $2.9 billion, while equity trading income increased by 18% to $2 billion. Investment banking revenue grew by 15%, with fees rising by 18% to $1.4 billion, indicating strong market demand for trading activities.
Bank of America CEO Brian Moynihan emphasized that the company benefited from year-over-year growth in investment banking and asset management fees, as well as sales and trading revenue. Although merger and acquisition advisory fees decreased by 14%, equity and bond issuance income grew by 16% and 37%, respectively.
The bank's credit loss provisions were $1.5 billion, slightly below the expected $1.57 billion. Net interest income, one of the bank's main sources of revenue, fell by 2.9% to nearly $14 billion, better than the analysts' expected 3.4% decline. This metric's decrease was partly due to the Federal Reserve's interest rate hikes over the past two years.
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At the end of the third quarter, the bank's loan balance increased to $10.8 billion, up 2.5% from the same period last year, higher than the analysts' estimate of $1.07 trillion. Bank of America's non-interest expenses grew by 4% year-over-year to nearly $16.5 billion, mainly due to increased spending related to revenue and investments in employees and technology, while analysts had previously expected this figure to grow by 4.1%.
It is understood that Bank of America's performance reflects the situation of American consumers and businesses in the context of the Federal Reserve's first reduction in borrowing costs in nearly five years. Despite geopolitical tensions and uncertainties surrounding the U.S. election, the bank's balance sheet has remained resilient. As of press time, Bank of America's pre-market stock price rose by nearly 2%,报价 at $42.63.
It is worth mentioning that last week, JPMorgan Chase and Wells Fargo also reported better-than-expected earnings in their latest financial reports, with executives pointing to the surge in investment banking and trading activities as the key to the performance的提升. In addition, Goldman Sachs' third-quarter profits soared by 45% due to unexpected growth in equity trading revenue and the recovery of investment banking operations. The company's equity traders recorded their best quarter in over three years and are on track to have the best year ever, while transaction brokers' commissions exceeded expectations in every key business area.
Across Wall Street, major banks are demonstrating their ability to withstand the adverse effects of interest rate cuts on retail business while highlighting the increased potential for transaction brokers, which could drive up fees across the entire industry.