Bank of America (BAC) earnings for the third quarter of 2022

Bank of America CEO Brian Moynihan interviews Jack Otter during “Barons Round Table” at the Fox Business Network studios on January 09, 2020 in New York City.

John Lambarsky | Getty Images

American bank He said on Monday that earnings and returns beat expectations for better-than-expected fixed income trading and interest income gains, thanks to volatile markets and higher interest rates.

Here are the numbers:

  • Earnings: 81 cents versus 77 cents, the share estimate of analysts surveyed by Refinitiv.
  • Revenue: $24.61 billion versus $23.57 billion estimated

Bank of America said in a statement Third-quarter earnings fell 8% to $7.1 billion, or 81 cents a share, as the company booked an $898 million provision for credit losses in the quarter. Net income jumped from interest expense to $24.61 billion.

The bank’s shares rose 3.1% in pre-market trading.

Bank of America, led by CEO Brian MoynihanHe was supposed to be one of the main beneficiaries of the Fed’s rate hike campaign. This is what happens, as lenders including Bank of America, c. B. Morgan Chase And the Wells Fargo They generate more revenue with higher prices, which allows them to make more profit from their primary activities of taking deposits and making loans.

“Our US consumer clients have remained resilient with strong, albeit slow-growing spending levels, and they continue to maintain high deposit amounts,” Moynihan said in the statement. “Across the bank, we have increased loans by 12% over the past year as we have provided financial resources to support our customers.”

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The bank’s net interest income jumped 24% to $13.87 billion in the first quarter, topping StreetAccount’s estimate of $13.6 billion, thanks to higher rates in the quarter and an expanding loan book.

Net interest margin, a key profitability measure for bank investors, widened to 2.06% from 1.86% in the second quarter of this year, topping analysts’ estimates of 2.00%.

Revenue from fixed income trading rose 27% to $2.6 billion, easily exceeding estimates of $2.24 billion. That more than offsets stock revenue, which fell 4% to $1.5 billion, down from an estimate of $1.61 billion.

Like its Wall Street rivals, investment banking revenue has fallen sharply, dropping nearly 45% to $1.2 billion, slightly above the $1.13 billion estimate.

It should be noted that the bank’s advanced provision for credit losses showed that the company was beginning to deal with a much harsher economic outlook.

While Bank of America issued $1.1 billion in reserves in the same period a year earlier, in the third quarter the company had to build up $378 million in reserves. That, plus a 12% increase in net discounts for bad loans to $520 million in the quarter, represents $898 million.

Bank of America shares are down 29% this year through Friday, worse than the KBW Bank’s 26% decline.

Last week, JPMorgan and Wells Fargo beat expectations for third-quarter earnings and revenue by generating better-than-expected interest income. City Group It also beat analyst estimates, and Morgan Stanley missed out on volatile markets caused losses on the investment management business.

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