Bank of America 3Q Profit Rises 10% - WSJ

By Gina Heeb

Bank of America is out of the gate with its third-quarter earnings.

   -- The nation's second-largest bank by assets earned $7.8 billion, up 10% 
      from $7.1 billion a year earlier. 
   -- That amounts to 90 cents per share. That beat the 83 cents expected by 
      analysts polled by FactSet. 
   -- Revenue rose 3% to $25.2 billion. That just beat expectations for $25.1 
      billion. 
   -- Bank of America reported more unrealized losses in the especially large 
      portfolio of securities it bought when rates were superlow. 
   -- The bank said it had unrealized losses of $131.6 billion on the bonds it 
      plans to hold to maturity, up from $105.8 billion at the end of June. It 
      doesn't have to recognize the losses if it never sells the bonds, but it 
      can't invest or lend out that money at higher rates while it holds them. 
   -- That has weighed on Bank of America's share price. The stock is down 
      18.5% this year through Tuesday, worse than the other megabanks. 
   -- More loans started to go bad. Net charge-offs climbed to $931 million 
      from $520 million a year earlier. The bank added to its rainy day funds 
      for future potential loan losses. 
 

"We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of last year but continuing to slow," CEO Brian Moynihan said in a statement.

The other megabanks posted third-quarter results on Friday that suggested the economy has held up better than expected against higher interest rates, but that trouble could be ahead.

Earnings at JPMorgan Chase, Wells Fargo and Citigroup also rose from a year earlier. Higher interest rates have allowed banks to charge more for loans, though the interest they have to pay to depositors has also risen. That has so far not been a huge problem for the megabanks.

Bank of America said net interest income increased 4% to $14.4 billion.

Noninterest income was roughly flat at $10.8 billion.

Adjusted trading revenue grew 8% to $4.4 billion. Its competitors have posted mixed results in their trading businesses.

Investment banking fees at Bank of America rose 4% to about $1.3 billion.

Write to Gina Heeb at [e-mail]

(END) Dow Jones Newswires

October 17, 2023 08:57 ET (12:57 GMT)

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