Bank of America Profit Jumps 32%
October 15 2018 - 8:05AM
Dow Jones News
By Rachel Louise Ensign
Bank of America Corp. said Monday that third-quarter profit rose
32%, as higher interest rates and last year's corporate tax cut
continued to lift bank earnings.
Quarterly profit at the Charlotte, N.C.-based bank, the second
largest in the U.S. by assets, was $7.167 billion, compared with
$5.424 billion a year ago. Per share, earnings were 66 cents.
Analysts polled by Refinitiv had expected 62 cents per share.
Third-quarter revenue was $22.777 billion, from $21.839 billion
a year ago. Analysts had expected $22.699 billion.
Earnings continue to benefit from last year's U.S. corporate tax
cut as well as interest rates. Rising rates are typically good for
banks because the companies turn a profit on the difference between
what they pay on deposits and what they collect on loans. In
September, the Federal Reserve raised its benchmark rate, the
eighth time it has done so since it started raising rates in late
2015.
Banks have been able to pocket most of the benefits from the
rate increases because customers aren't broadly demanding more
interest on their deposits. Bank of America paid 0.50% on U.S.
interest-bearing deposits in the third quarter, compared with 0.38%
in the second quarter. Net interest income rose 6%.
Deposits grew by nearly 5% and loans were roughly flat from a
year earlier. Loan growth has slowed down across the banking
industry since the 2016 presidential election.
Quarterly expenses fell more than 2% to $13.067 billion, from
$13.394 billion a year ago. The bank's income tax expense fell by
more than 16%.
The bank's investment-banking unit continued to struggle, with
fees down 18% from the prior year. The unit has slipped in key
businesses including U.S. mergers this year.
Bank of America's trading revenue fell 2.5%. Trading results
have been mixed across the industry. On Friday, Citigroup Inc. said
trading revenue was up 7%. JPMorgan Chase & Co.'s trading
revenue slipped 2%.
Bank stocks jumped early in the year as market volatility fueled
revenue on their equities-trading desks, but they have have
flatlined since then. In premarket trading, Bank of America shares
rose 0.6%.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
October 15, 2018 07:50 ET (11:50 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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