Bank of America Reports Solid Q3 Results Despite 12% Drop in Net Income

Bank of America Corp on Tuesday reported "solid" third-quarter results, with strength in its investment banking division, though net income declined.

The Charlotte, North Carolina-based bank said net income dropped 12% to USD6.90 billion, or USD0.81 per diluted share, compared to USD7.80 billion, or USD0.90 per share, a year earlier.

Revenue, net of interest expenses, inched up to USD25.35 billion from USD25.17 billion, driven by higher asset management, investment banking fees, sales and trading revenue, and offset by lower net interest income.

Analysts had expected earnings of USD0.77 per share and revenue of USD25.3 billion, according to a CNBC-cited consensus. In response, BofA shares rose 1.0% in premarket trading to USD42.34 in New York on Tuesday.

Net interest income decreased 2.9% to USD13.97 billion from USD14.38 billion a year ago, as higher deposit costs outweighed loan growth and asset yields. However, NII was up 2.0% from USD13.70 billion in the second quarter.

Chair and CEO Brian Moynihan described the results as "solid," highlighting "higher average loans and our fifth consecutive quarter of sequential average deposit growth." He added that net interest income increased over the second quarter, supported by double-digit growth in investment banking, asset management fees, and sales and trading revenue.

By division, Consumer Banking posted a 5.9% decline in net income to USD2.69 billion, while credit loss provisions dropped 7.1% to USD1.30 billion.

Global Wealth and Investment Management revenue increased 8.3% to USD5.76 billion, reflecting a 14% rise in asset management fees due to stronger market performance and asset under management inflows of USD21 billion.

Global Banking saw revenue dip 6.0% to USD5.83 billion, while Global Markets revenue climbed 14% to USD5.63 billion, thanks to higher sales, trading revenue, and investment banking fees.

Total provisions for credit losses stood at USD1.54 billion, flat compared to the prior quarter but up from USD1.23 billion a year earlier. Non-interest expenses increased 4% to USD16.5 billion, mainly due to revenue-related expenses and investments.

The bank reported average deposit balances of USD1.92 trillion, up 2%, and average loans and leases of USD1.06 trillion, up 1%. Its CET1 ratio was 11.8%, slightly below the 11.9% reported last year, but still 112 basis points above the new regulatory minimum that came into effect in October.

During the quarter, Bank of America returned USD5.6 billion to shareholders via dividends and buybacks.