Bank of America tops profit estimates on better-than-expected interest income

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

Here’s what the corporate reported:

• Earnings per share: 90 cents vs. anticipated 82 cent estimate from LSEG, previously referred to as Refinitiv
• Revenue: $25.32 billion, vs. anticipated $25.14 billion

How did Bank of America’s bonds fare final quarter?

That’s one of the important thing questions buyers have for the second-biggest U.S. financial institution by property.

Bank of America was supposed to be one of the largest beneficiaries of greater interest charges this yr. Instead, the corporate’s inventory has been the worst performer amongst its big-bank friends in 2023. That’s as a result of, beneath CEO Brian Moynihan, the lender piled into low-yielding, long-dated securities in the course of the pandemic. Those securities misplaced worth as interest charges climbed.

That’s made Bank of America extra delicate to the recent surge within the 10-year Treasury yield than its friends — and extra just like some regional banks which might be additionally nursing underwater bonds. Bank of America had greater than $100 billion in paper losses on bonds at midyear.

The state of affairs has pressured the financial institution’s web interest income, or NII, which is a key metric that analysts will probably be watching this quarter. In July, the financial institution’s CFO, Alistair Borthwick, affirmed earlier steerage that NII can be roughly $57 billion for 2023.  

Bank of America inventory has fallen 18% this yr by means of Monday, trailing the ten% acquire of rival JPMorgan Chase.

Last week, JPMorgan, Wells Fargo and Citigroup every topped expectations for third-quarter profit, helped by better-than-expected credit score prices. Morgan Stanley posts outcomes Wednesday.  

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