Bank of America (BAC) Earnings 3Q 2023

Brian Moynihan, CEO of Bank of America

Heidi Goodman | CNBC

Bank of America topped estimates for third-quarter profit Tuesday on stronger-than-expected interest income.

Here’s what the company announced:

  • Earnings per share: 90 cents vs. 82 cents expected from LSEG, formerly Refinitiv
  • Revenue: $25.32 billion, vs. $25.14 billion expected

Profit rose 10% to $7.8 billion, or 90 cents per share, from $7.1 billion, or 81 cents per share, a year ago, the Charlotte, North Carolina-based bank said in a statement. liberation. Revenue rose 2.9% to $25.32 billion, beating LSEG estimates.

Bank of America’s interest income rose 4% to $14.4 billion, roughly $300 million more than analysts expected, driven by higher rates and loan growth.

Shares of Bank of America rose 1% in premarket trading.

CEO Brian Moynihan said the second-largest U.S. bank by assets continues to grow despite signs of an economic slowdown.

“We’ve added customers and accounts across all business types,” Moynihan said. “We’ve done this in a healthy but sluggish economy that has seen U.S. consumer spending rise even more than last year, but continue to slow.”

Bank of America should be one of the biggest beneficiaries of higher interest rates this year. Instead, the company’s stock was the worst performer among its big bank peers in 2023. That’s because under Moynihan, lenders piled into low-yielding, long-dated bonds during the Covid pandemic. Those bonds lost value as interest rates rose.

That makes Bank of America more sensitive than its peers to 10-year Treasury yields — and similar to some regional banks that maintain underwater bonds. Bank of America had paper losses on more than $100 billion in bonds Mid year.

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A bank’s net interest income, or NII, is a key metric that analysts watch this quarter. In July, the bank’s CFO, Alastair Borthwick, confirmed earlier guidance that NII would be around $57 billion by 2023.

Bank of America shares fell 18% this year from Monday to Monday, trailing rival JPMorgan Chase’s 10% gain.

Last week, JPMorgan, Wells Fargo and Citigroup topped expectations for third-quarter profits, helped by better-than-expected borrowing costs. Morgan Stanley is scheduled to release results on Wednesday.

This story is developing. Check back for updates.

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