A Bank of America logo in New York, on Jan. 30, 2019.CARLO ALLEGRI/Reuters
Bank of America Corp beat estimates for third-quarter profit on Thursday, boosted by strong growth across its businesses and a release of reserves it had set aside last year to cover bad loans.
Growth in loans and leases, higher spending on credit and debit cards, and strong equity-trading and M&A activity helped the bank record a 64 per cent rise in earnings, closely mirroring Wednesday’s results of industry bellwether JPMorgan Chase & Co.
Net interest income, a key measure of how much banks make from lending, rose nearly 10 per cent to $11.09-billion.
Excluding government-backed loans from the pandemic era Paycheck Protection Program (PPP), the bank grew average loans and leases by 2.3 per cent in the third quarter from the prior quarter, although that figure fell 4.3 per cent from last year.
“We had loan growth in every loan product at the company. It was very broad based,” the bank’s Chief Financial Officer Paul Donofrio said. “We are seeing more spending, we are adding more cards, and payment levels are still very high.”
BofA shares were up nearly 2.5 per cent in trading before the bell.
Combined spending on credit and debit cards was up 21 per cent to $201-billion in the quarter, the bank said.
Revenue from its equities division rose 33 per cent, driven by growth in client financing activities and strong trading performance.
The second-largest U.S. bank by assets released reserves of $1.1-billion in the quarter. It had set aside tens of billions of dollars last year to cover possible loan defaults, which it has steadily been releasing as the economic outlook improves.
Bank of America’s revenue jumped 12 per cent to $22.8-billion.
Net income applicable to common shareholders rose to $7.26-billion, or 85 cents per share, for the quarter ended Sept. 30 from $4.44-billion, or 51 cents per share, a year earlier.
Analysts on average had expected a profit of 71 cents per share, according to the IBES estimate from Refinitiv.
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