Bank of America Third-Quarter Profit Fell on Charge -- 2nd Update
October 16 2019 - 10:55AM
Dow Jones News
By Rachel Louise Ensign
A one-time charge dented Bank of America Corp.'s third-quarter
profit, but the bank posted gains in its consumer, wealth and
commercial businesses.
Quarterly profit at the Charlotte, N.C.-based bank, the second
largest in the U.S. by assets, was $5.78 billion, compared with
$7.17 billion a year ago. Per share, earnings were 56 cents.
Analysts polled by FactSet had expected 54 cents per share.
Earnings were hit by a $2.1 billion charge related to the coming
dissolution of the bank's payment-processing partnership with First
Data Corp.
Third-quarter revenue was $22.81 billion, up from $22.72 billion
a year ago. Analysts had expected $22.58 billion.
Profit rose in the bank's consumer banking, wealth and
commercial units, but fell in the division that houses sales and
trading.
Shares of Bank of America rose 2.1% in morning trading.
Bank of America benefited from the series of interest-rate
increases from the Federal Reserve that began in late 2015. That is
because the bank was able to charge borrowers more interest without
having to significantly increase payouts to depositors.
But now the Fed is moving in the other direction: It cut rates
twice in the third quarter. That weighed on the bank's lending
businesses, but loan growth helped counter that. Net interest
income rose 1% from a year earlier and held steady from the prior
quarter.
Net interest margin fell to 2.41% from 2.44% in the prior
quarter.
Loans were up about 5% and deposits rose about 4% from a year
earlier. The lender reported an uptick in new consumer checking
accounts and wealth-management clients. Bank of America is
expanding into cities where it previously didn't have any
branches.
Trading revenue rose 4%, helped by higher revenue in both fixed
income and equities. Third-quarter trading results at other banks
have been mixed. Trading revenue was up at JPMorgan Chase & Co.
and Goldman Sachs Group Inc., and down slightly at Citigroup
Inc.
Fees in the firm's investment bank, which slipped in recent
years, rose 27%. The unit has hired more bankers to focus on
midsize companies, executives said.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
October 16, 2019 10:40 ET (14:40 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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