Bank of America profit beats on strength across businesses

Oct 14 (Reuters) – Financial institution of America Corp beat estimates for third-quarter revenue on Thursday, boosted by sturdy development throughout its companies which executives stated they anticipated to proceed subsequent quarter.

Development in loans and leases, larger spending on credit score and debit playing cards, and robust equity-trading and M&A exercise helped the financial institution file a 64% rise in earnings.

Web curiosity revenue (NII), which measures how profitably a financial institution can lend out depositors’ funds, rose almost 10% to $11.09 billion. Financial institution of America’s NII hit a low within the third quarter final yr, however executives stated they have been optimistic it will proceed to rise this yr and subsequent.

“We predict modest NII development from the third quarter to the fourth quarter,” the financial institution’s Chief Monetary Officer Paul Donofrio stated. “(It) goes to rely upon loan-to-deposit development, and we anticipate each of these to proceed to develop, according to a rising financial system.

“One might anticipate, I feel, strong enchancment in NII in … the complete yr 2021 versus the complete yr 2022.”

Common loans and leases, excluding these from the government-backed Paycheck Safety Program (PPP), grew by 2.3% within the third quarter from the prior quarter, though that determine fell 4.3% from final yr.

Nonetheless, almost each mortgage product grew some within the quarter, and the financial institution issued round 1 million extra bank cards, additional fueling that development.

“We had mortgage development in each mortgage product on the firm. It was very broad primarily based,” “We’re optimistic about future development.”

BofA shares have been up almost 2.5% in mid-morning buying and selling.

Mixed spending on credit score and debit playing cards was up 21% to $201 billion within the quarter, the financial institution stated.

Income from its equities division rose 33%, pushed by development in consumer financing actions and robust buying and selling efficiency.

The second-largest U.S. financial institution by property launched reserves of $1.1 billion within the quarter. It had put aside tens of billions of {dollars} final yr to cowl potential mortgage defaults, which it has steadily been releasing because the financial outlook improves.

Financial institution of America’s income jumped 12% to $22.8 billion.

Web revenue relevant to frequent shareholders rose to $7.26 billion, or 85 cents per share, for the quarter ended Sept. 30 from $4.44 billion, or 51 cents per share, a yr earlier.

Analysts on common had anticipated a revenue of 71 cents per share, based on the IBES estimate from Refinitiv.

Reporting by Niket Nishant in Bengaluru and Elizabeth Dilts Marshall in New York; Modifying by Anil D’Silva and Emelia Sithole-Mataris

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