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Bank of America, the second-largest U.S. bank, experienced a significant uptick in profits during the third quarter of the year, primarily attributed to an increase in interest income earned from its customers. Furthermore, the bank’s investment banking and trading activities outperformed expectations, contributing to this positive financial performance.
During this period, Bank of America recorded a net income of $7.8 billion, equivalent to 90 cents per share, which subsequently boosted the bank’s shares by 0.5% in premarket trading.
CEO Brian Moynihan expressed, “We added clients and accounts across all lines of business. We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of last year but continuing to slow.”
The bank’s investment banking and trading divisions delivered results that exceeded Wall Street’s projections, demonstrating higher revenue despite challenges experienced by the broader industry.
Total investment banking fees increased by 2% to reach $1.2 billion, while sales and trading revenue displayed an 8% growth, reaching $4.4 billion during the third quarter.
Furthermore, banks have witnessed an expansion in their interest income due to the ability to charge higher interest rates on loans following the Federal Reserve’s decision to raise borrowing costs in an effort to combat inflation. Bank of America’s net interest income (NII) climbed by 4% in the third quarter, reaching $14.4 billion.
Other prominent financial institutions such as JPMorgan Chase, Citigroup, and Wells Fargo also reported an upsurge in their NII figures and subsequently revised their forecasts for this vital metric.
The overall positive trend in interest income has been buoyed by the financial health of Americans, who continue to make credit card expenditures despite concerns of an impending economic slowdown.
Bank of America’s consumer banking unit experienced a 6% increase in revenue, reaching $10.5 billion.
For common shareholders, the net income applicable came in at $7.27 billion in the third quarter, compared to $6.58 billion during the same period the previous year.
