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Bank of America reported third-quarter profits that exceeded expectations but rose slower than rivals, boosted by solid performance from its Wall Street businesses, but weighed down by hundreds of billions of dollars of low-yielding bonds that the bank bought during the pandemic.
Profits at the US’s second-largest bank rose 10 per cent in the third quarter from a year ago to $7.8bn. That was a better result than analysts expected, but it trailed rivals.
Wells Fargo and JPMorgan, both of which reported quarterly results on Friday, increased profits by 68 per cent and 38 per cent respectively. Citigroup, which last month announced a restructuring to address years of poor performance, reported a 2 per cent rise in profits.
BofA’s revenue climbed 3 per cent in the three-month period ended September 30, compared with the same quarter a year ago. The bank also reported that it cut its overall headcount in the quarter by 2,800 jobs, and now has just under 213,000 employees.
One bright spot was in BofA’s Wall Street businesses — investment banking and sales and trading — which, as in the past few quarters, outperformed expectations and surpassed rivals.
BofA told reporters during a Tuesday call the bank had its best quarter in sales and trading in a decade, with revenue rising 8 per cent to $4.4bn. That included a 10 per cent jump in revenue from its equities activity to $1.7bn.
The shares were up 1 per cent in pre-market trading following the results.
Results from the biggest US banks have been more resilient than analysts expected, even if concerns remain about an approaching economic downturn.
Spending by BofA’s credit card customers rose 3 per cent in the quarter compared with a year ago. Lending also increased, but only by 1 per cent.
But the bank set aside $1.2bn for potential loan loses, up more than 20 per cent from the same period a year ago, signalling concerns that the US economy is closer to an economic downturn that could make it harder for borrowers to repay their debts.
“Our teammates delivered another strong quarter,” said BofA chief executive Brian Moynihan in a statement released with the earnings. “We did this in a healthy but slowing economy that saw US consumer spending still ahead of last year but continuing to slow.”
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