Bank Of America Q3 Profit Down 8%, But Results Top Estimates

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Bank of America Corp. (BAC) reported Monday that net profit for the third quarter decreased 8 percent from last year, hurt by provision for credit losses as well as lower fees and service charges. However, both earnings and revenues for the quarter topped analysts' estimates.

In pre-market activity on NYSE, Bank of America shares were gaining around 2.4 percent to trade at $32.46.

"We continued to see strong organic client growth across our businesses, with increased client activity helping to drive revenue up by 8%," said Chairman and CEO Brian Moynihan.

For the third quarter, net income applicable to common shareholders declined to $6.58 billion from last year's 7.26 billion, with earnings per share decreasing to $0.81 from $0.85 in the prior-year quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.77 per share for the quarter. Analysts' estimates typically exclude special items.

The provision for credit losses was an expense of $898 million, compare to a benefit of $624 million in the prior year, hurt by asset quality deterioration during the quarter.

Total revenue, net of interest expense, increased 8 percent to $24.50 billion from $22.77 billion in the prior-year quarter. Wall Street expected revenues of $23.57 billion for the quarter.

Net interest income was $13.77 billion, up 24 percent from $11.09 billion last year, driven by benefits from higher interest rates, including lower premium amortization expense, and solid loan growth.

Non-interest income declined 8 percent to $10.74 from $11.67 billion last year, as higher sales and trading revenue was more than offset by lower investment banking and asset management fees as well as lower service charges.

In the quarter, Consumer Banking revenue increased 12 percent to $9.90 billion, Global Wealth and Investment Management revenue grew 2 percent to $5.43 billion and Global Banking revenue advanced to $5.59 billion from $4.25 billion, while Global Markets revenue edged down 1 percent to $4.48 billion from last year.

Noninterest expense grew to $15.30 billion from $14.44 billion, primarily reflecting the $354 million settlement of legacy monoline insurance litigation.

Average loan and lease balances in business segments increased 12 percent to $1.0 trillion, while deposits edged up 1 percent to $2.0 trillion.

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