Bank of America Profit Climbs, Driven by Higher Interests Rates -- 2nd Update

Date : 10/13/2017 @ 8:41AM
Source : Dow Jones News
Stock : Bank of America Corp. (BAC)
Quote : 27.17  0.59 (2.22%) @ 7:57PM

Bank of America Profit Climbs, Driven by Higher Interests Rates -- 2nd Update

Bank of America (NYSE:BAC)
Historical Stock Chart

1 Month : From Sep 2017 to Oct 2017

Click Here for more Bank of America Charts.
By Rachel Louise Ensign 

Bank of America Corp. said its third-quarter profit rose to $5.59 billion as higher interest rates helped the bank inch closer to meeting its profitability goals.

Quarterly profit at the second-largest U.S. bank by assets rose 13% from $4.96 billion a year earlier. Per-share earnings of 48 cents were up from a year earlier and topped analyst expectations of 45 cents.

Third-quarter revenue was $21.84 billion, up 0.9% from $21.64 billion a year earlier. On an adjusted basis, revenue was $22.08 billion, up from $21.86 billion a year earlier. Analysts had expected $21.98 billion.

Bank of America's quarterly return on equity was 8.1%, up from the prior quarter and better than rival Citigroup Inc.'s, though below J.P. Morgan Chase & Co.'s and the bank's 10% theoretical cost of capital.

But the bank inched closer to meeting performance goals it set for itself, including a 1% return on average assets and a 12% return on average tangible common equity. In the third quarter, those metrics stood at 0.98% and 11.32%, respectively.

It was also the second quarter in a row where the bank's efficiency ratio fell below 60%, another performance target the bank had previously set. Specifically, the ratio fell to 59.5% from 61.7% a year ago. It also stood at 59.5% in the second quarter.

Expenses for the period edged down 2.5% to $13.14 billion, from $13.48 billion a year ago. The bank continued to trim branches and employees, measures that have helped it become leaner in recent years.

After an initial lift from last November's election, Bank of America shares climbed 4.6% in the past month. That occurred alongside rising long-term bond yields, which are expected to help the bank's lending profits.

Bank of America also got an important vote of confidence in August when Warren Buffett's Berkshire Hathaway Inc. officially became the bank's largest shareholder, a result of an investment Berkshire initially made in 2011. Since then, Mr. Buffett has publicly praised Bank of America chief Brian Moynihan and said his firm plans to be a shareholder for a long time.

Bank of America's large base of U.S. deposits and rate-sensitive mortgage securities makes it particularly poised to benefit from an uptick in interest rates. The bank's net interest income rose to $11.16 billion, though it started to pay slightly higher rates to depositors in the quarter. The rate the bank paid on U.S. interest-bearing deposits was 0.24%, compared with a rock-bottom 0.11% in the prior quarter.

Like other big banks, trading revenue faced a tough environment in the third quarter. Trading revenue at Bank of America, excluding an accounting adjustment, fell 15% to $3.15 billion from $3.73 billion in last year's third quarter.

Shares rose 0.7% premarket.

Write to Rachel Louise Ensign at rachel.ensign@wsj.com

 

(END) Dow Jones Newswires

October 13, 2017 08:26 ET (12:26 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.

Latest BAC Messages

{{bbMessage.M_Alias}} {{bbMessage.MSG_Date}} {{bbMessage.HowLongAgo}} {{bbMessage.MSG_ID}} {{bbMessage.MSG_Subject}}

Loading Messages....


No posts yet, be the first! No {{symbol}} Message Board. Create One! See More Posts on {{symbol}} Message Board See More Message Board Posts


Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.


NYSE, AMEX, and ASX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.