Bank of America posts record quarterly pre-tax income in spite of investment bank weakness
Bank of America today beat analyst expectations with record quarterly pre-tax profits and higher revenues for the third-quarter, although analysts were less impressed by the lender’s loan growth amid nerves from the recent market sell-off.
Pre-tax income rose by 18 per cent to $9bn in the three months to the end of September, while revenues rose four per cent to $22.8bn, the bank reported.
Net income hit $7.2bn, a 32 per cent year-on-year increase driven by low impairments on assets as well as the recent tax cuts brought in by the White House.
Brian Moynihan, the group’s chief executive, said the profits rise was down to “responsible growth, backed by a solid US economy and a healthy US consumer”.
The bank’s investment banking operations, under the Merrill Lynch brand, performed less strongly, in spite of a mergers and acquisitions boom. Investment banking revenues in global banking fell by 18 per cent to $1.2bn, as advisory work and leveraged finance dried up.
Revenues also edged down in the global markets arm, as trading operations in fixed income, currencies and commodities fell by five per cent owing to “lower client activity in rates products”. The figures were also flattered by a profit on a sale on “an equity investment”.
The bank had loans at the end of the the period of $929.8bn, a 2.6 per cent annualised fall.
Brian Kleinhanzl, an analyst at KBW investment bank, said that the bank was able to “manufacture better earnings this quarter versus last quarter but loan growth was disappointing”.
However, a rise in net interest margin, the money the bank makes on its lending, came in higher than expected, boosted by higher interest rates from the US Federal Reserve.