Bank of America (NYSE:BAC), the second-biggest bank by assets in the US, on Monday posted a sizeable jump in profits for the third-quarter, helped by rising interest rates and corporate tax changes.
The Charlotte, North Carolina bank reported a 32% rise in earnings to $7.2 billion, or $0.66 per share, up from $5.4 billion in the year-ago quarter. The results zipped past Wall Street’s estimate of $0.62 per share. Its revenue, meanwhile, came in at $22.8 billion, up from $21.84 billion last year and ahead of analysts’ estimate of $22.67 billion.
CEO Brian Moynihan said this reporting period marks the 15th straight quarter the bank was able to improve operating leverage. “Responsible growth, backed by a solid US economy and a healthy US consumer, combined to deliver the highest quarterly pre-tax earnings in our company’s history,” Moynihan said in a statement.
READ: JPMorgan Chase and Citigroup beat Wall Street's 3Q earnings forecasts while Wells Fargo falls short
This quarter, banks’ earnings are being lifted by the reduction in the US corporate tax rate as well as rising interest rates, which boost banks’ profits from loans. Bank of America’s results come on the heels of strong showings last week from its rivals JP Morgan Chase & Co, Wells Fargo and Citigroup.
The bank also pared back its expenses in the quarter by 2% to $13.07 billion, down from $13.4 billion last year.
It wasn’t a strong quarter for the bank’s investment-banking group which posted an 18% fall in revenue as the firm steered clear of more difficult deals. Its trading revenue also dropped by 2.5% in the quarter due to a slowdown in bond trading. Fixed-income trading revenue amounted to $2.06 billion while equities trading came in at $1.01 billion.
Earnings from the bank’s consumer-banking group, its biggest profit center, rose 49%, meanwhile, to $3.1 billion.
Bank of America shares rose 1% in Monday’s pre-market session to $28.71.
Contact Ellen Kelleher at ellen@proactiveinvestors.com