Bank of America (BoA), in its 3Q18 results reported on Monday (15 October), indicated that its revenue stood at $22.78bn vs the $21.84bn posted in 3Q17, while diluted EPS came in at $0.66 vs $0.46 recorded in the same period of 2017. Thomson Reuters consensus forecasts had expected earnings of USc62 on revenue of $22.67bn. The bank reported a 35% YoY rise in quarterly profit as it benefited from tax cuts, while growth in lending helped BoA to offset lower bond trading revenue.Nevertheless, Reuters writes that the bank’s loan growth lagged rivals and fees from advising on deals and underwriting bonds fell in 3Q18, weighing on its share price even as profit beat expectations.
The bank said its provision for credit losses decreased by $118mn to $716mn – well below the $964.2mn consensus estimate, while the firm’s net interest margin rose 4 bpts to 2.42 ppts, beating the consensus analyst estimate by 1-bpt. BoA also managed to cut expenses by 2% YoY to $13.1bn, matching consensus analysts’ expectations.
By segment, profit in consumer banking, its largest division, jumped 49% YoY to $3.1bn on the back of improving credit, expenses and lower taxes. That exceeded the improvements seen by wealth management, global banking and market divisions. Loans in the business rose 6% YoY to $285bn and deposits increased by 4% YoY to $688bn. BoA’sglobal markets division posted a 21% YoY rise in profit to $912mn, while fixed income trading revenue came in at $2.06bn and equities trading generated $1.01bn, roughly matching consensus expectations for the quarter.
The share price moved notably lower on Monday (15 October), slumping by c. 1.5%, despite the upbeat results. However, it closed c. 2% higher on Tuesday (16 October).