US Markets
Tuesday, October 17th, 2023 1:43 pm EDT
Key Points
- Bank of America exceeded expectations for its third-quarter profit, with a 10% increase in profit to $7.8 billion, or 90 cents per share, compared to the previous year. This strong performance was driven by higher-than-expected interest income.
- Key financial figures included earnings per share of 90 cents, surpassing the expected estimate of 82 cents, and revenue of $25.32 billion, slightly exceeding the anticipated $25.14 billion. Interest income also saw a 4% rise to $14.4 billion, approximately $300 million more than analysts had predicted.
- Bank of America has faced challenges due to its exposure to low-yielding, long-dated securities acquired during the COVID-19 pandemic, resulting in significant paper losses on bonds. This has made the bank more sensitive to fluctuations in the 10-year Treasury yield and has negatively impacted its stock performance in 2023.
Bank of America has exceeded third-quarter profit expectations, reporting a 10% increase in profit to $7.8 billion, equivalent to 90 cents per share, compared to $7.1 billion, or 81 cents per share, in the previous year. The company’s revenue also rose by 2.9% to $25.32 billion, slightly surpassing the expected estimate. Notably, the bank’s interest income saw a 4% increase to $14.4 billion, driven by higher rates and loan growth, which was around $300 million more than analysts had anticipated. Bank of America’s provision for credit losses also performed better than expected, totaling $1.2 billion, under the estimated $1.3 billion.
CEO Brian Moynihan mentioned that the bank continued to grow, adding clients and accounts across all business lines despite signs of an economic slowdown. However, the bank has faced challenges due to its exposure to low-yielding, long-dated securities acquired during the COVID-19 pandemic, resulting in significant paper losses on bonds, making it more sensitive to the recent surge in the 10-year Treasury yield. This situation has put pressure on the bank’s net interest income (NII), a crucial metric closely monitored by analysts.
While Bank of America was initially expected to benefit from higher interest rates, the stock has underperformed compared to other major banks in 2023. The bank’s stock had fallen by 18% by the time of the article, in contrast to a 10% gain reported by rival JPMorgan Chase. Other large banks, such as JPMorgan, Wells Fargo, and Citigroup, had recently exceeded third-quarter profit expectations, largely due to better-than-expected credit costs. Morgan Stanley was set to report its results the following day.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/10/17/bank-of-america-bac-earnings-3q-2023.html
