Bank of America profit rises 6.6 per cent as bond trading picks up

Net income attributable to shareholders rose 6.6 per cent to $4.45 billion in the third quarter ended Sept. 30, from $4.18 billion a year earlier

Gulf News

Washington: Bank of America Corp, the second-largest US bank by assets, reported its first rise in profit in three quarters on Monday, boosted by strong results from bond trading.

Net income attributable to shareholders rose 6.6 per cent to $4.45 billion in the third quarter ended Sept. 30, from $4.18 billion a year earlier. Earnings per share rose to 41 cents from 38 cents in the same period of 2015.

Analysts on average had expected earnings of 34 cents per share, according to Thomson Reuters I/B/E/S, although it was not immediately clear if the figures were directly comparable.

Revenue from trading fixed-income securities, currencies and commodities jumped 32 per cent from a year earlier, boosted by Brexit-inspired volatility and changing expectations for monetary policy in the United States, Europe and Japan.

Non-interest expenses fell 3.3 per cent to $13.48 billion.

BofA, like its peers, has been slashing costs to help make up for weak income from lending after years of low interest rates.

Chief Executive Brian Moynihan said in July the bank would cut annual costs by another $5 billion by 2018, which would take the total to about $53 billion from about $58 billion in 2015.

The Federal Reserve, which last raised interest rates by 0.25 per centage points in December, has kept rates unchanged since then but has indicated a possible hike in December.

The three other big US banks that have reported third-quarter results all beat profit and revenue forecasts.

However, their net earnings declined — JPMorgan Chase & Co’s by 7.6 per cent, Citigroup Inc’s by 10.5 per cent and Wells Fargo & Co’s by 3.7 per cent.

BofA, whose shares were up 1.6 per cent at $16.25 in premarket trading, said total revenue net of interest expenses rose 3 per cent to $21.64 billion.

Net interest income rose 3 per cent to $10.20 billion, the first increase in three quarters.

BofA said last month it would alter the way it accounts for changes in long-term interest rates from the third quarter as a way to reduce volatility in reported net interest income.

Like JPMorgan and Wells Fargo, BofA set aside more money to cover potential bad loans. The bank’s provisions rose 5.5 per cent $850 million in the quarter.

Income from investment banking rose 13.3 per cent to $1.46 billion, driven by higher debt and equity issuance activity.

JPMorgan and Citigroup also benefited from a pickup in investment banking activity after a slow first-half of the year.

Adjusted revenue from Bank of America’s wealth and investment management unit, which includes Merrill Lynch, fell 1.7 per cent to $4.38 billion.

The wealth business has played a significant role in the bank’s strategy to grow revenue from more stable businesses that require relatively little capital.

Up to Friday’s close, BofA’s shares had fallen 4.9 per cent this year, compared with a 2.5 per cent decline in the KBW banking index.