Bank of America (BAC) -) posted better-than-expected third quarter earnings Tuesday, thanks in part to a big jump in net interest income, as U.S. banks continue to benefit from profitable loan growth in a high interest rate environment.
Bank of America said profit for the three months ended in September were tabbed at 88 cents per share, up 12.8% from the same period last year and modestly higher than the Street consensus forecast of 84 cents per share.
Group revenues, the bank said, rose 22% from last year to $24.3 billion, just ahead of estimates of a $25.1 billion tally. Consumer banking revenues were up 15% to $10.5 billion, although average deposits fell by 1%, or $18 billion, from the previous quarter to around $1.9 trillion.
Net interest income rose 14% to $14.3 billion, the bank said, while total loans in consumer banking were up 6% to $307 billion. Bank of America said it set aside around $1.1 billion to cover bad loan risk in its portfolio, however, a figure that rose $602 million from the same period last year.
“We delivered one of the strongest quarters and first half net income periods in the company’s history," said CEO Brian Moynihan. "Continued organic client growth and client activity across our businesses complemented beneficial impacts of higher interest rates and produced an 11% increase in revenue.
"We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market. All businesses performed well, and we saw improved market shares, particularly in our Sales and Trading and Investment Banking businesses," he added. "A strong balance sheet and ample liquidity allowed us to continue investments in our franchise to drive long-term value for stakeholders.”
Bank of America shares were marked 3.5% higher in early Tuesday trading immediately following the earnings release to change hands at $30.44 each.
Last week, Bank of America's larger rival, JPMorgan Chase (JPM) -), posted a huge increase in net interest income, which rose 44% to an all-time high of $21.9 billion, thanks in part to its purchase of failed lender First Republic earlier in the year.
That helped offset a slide sales from other parts of the bank, where equity market revenues were down 20% to $2.5 billion and fixed income revenues fell 3% to $4.6 billion.
JPMorgan said earnings for the three months ending in June were pegged at $14.47 billion, or $4.75 per share, up 58.3% from the same period last year and well ahead of the Street consensus forecast of $4.00 per share.
Managed revenues, JPMorgan said, rose 34.2% from last year to $42.4 billion, again well ahead of analysts' estimates of a $39 billion tally, while expenses were up 11% at $20.822 billion.
